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2018 (8) TMI 702

purposes of discharging service tax liability - Held that:- There is no service being provided to the customer in the course of levying such charges. The customer in any case was not operating his account for quite some time, only for which reason the account has been declared dormant or inoperative by the bank. By levying “dormant account charges’ such account holders are not getting any additional services or benefits that they were not getting earlier. This being so, levy of such charges are nothing but a penalty imposed on such account holders for keeping their account inoperative. Banks need a constant rolling of money and deposits, and inoperative or dormant account will not help this purpose. The dormant account charges are therefore .....

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of the order of original authority. Aggrieved, the appellants are before this forum. 2. When the matter came up for hearing, on behalf of the appellant, Ld. Advocate Shri N. Quadir Hasyen made oral and written submissions which can be broadly summarized as under : i) A Bank Account which is inoperative for more than 12 months (ie., 1 year) is known as Dormant Accounts . So the definition operation of Bank Account is not applicable to Dormant Accounts. ii) Dormant period charges is a penalty for a customer who is not operating the bank account on regular basis and the purpose of the implementation of this charges for regulating the dormant bank account into an operative one (or) to eliminate those accounts from the system for the effective .....

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ovided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as penal rent for retaining the containers beyond the pre-determined period. Therefore, the amount collected as detention charges is not chargeable to service tax. 3. On the other hand, on behalf of the department, Ld. A.R Shri A. Cletus supports the impugned order and also submits as under : i) As per the definition of Banking and Other Financial Services in Section 65 (12) of the Finance Act, 1994, the financial services of operation of bank accounts is liable to service tax w.e.f.10.09.2004. The Dormant Period Charge is .....

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ders that they have to operate their account in perpetuity. The customer reserves his right to withdraw the amount at any time and has the option to withdraw the money on demand. Deposits from these customers are very important to the banks since account holders are relatively paid very low rates of interest on the deposits made by them. The deposits made by the banks from such account holder is then lent to borrowers at much higher rates of interest which is one of the sources of profit. Some of other income areas are interchange fees for use of credit cards, debit cards etc. Banks also get fees / charges for using ATMs etc. When the saving or current account has not had any transactions or activity for more than a specific period, the acc .....

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does not form part of the value of taxable service. In the circular dt. 26.4.2010 the issue of inclusability of container detention charges was addressed wherein it has been held as under : 4. The issue has been examined. To retain the container beyond the pre-holding period is neither a service provided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as penal rent for retaining the containers beyond the pre-determined period. Therefore, the amount collected as detention charges is not chargeable to service tax. 5.3 Eodem argumento, the dormant account charges levied on some o .....

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