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TMI Blog2019 (1) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... e charging brokerage from their customers. They are also registered as depository participant with the National Securities Depository India Ltd and Central Depository services Ltd. in which the customer of Appellant trade in securities. The Appellant has received depository fee from their customer on which service tax has been discharged by them. In case where the brokerage or fee remained due to the Appellant they charged interest from their customer on such late payment. The CERA audit of the Appellant was conducted and on the basis of same they were issued show cause notice dated 24.10.2016 covering the period 01.04.2011 to 31.03.2016. It was alleged that the Appellant is availing cenvat credit and are also providing services in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is absolutely erroneous. He relies upon the definition of "banking and financial services" under the Finance Act to submit that none of the services covered under the definition is being rendered by them. That in terms of Section 65 (11) of the Finance Act, 1994, the banking company has the meaning assigned to it in clause (a) of Section 45A of the Reserve Bank of India Act, 1934. They are not Banking Company or non banking company or any financial institution under the RBI Act, 1934 or Banking and Regulation Act. Without license no entity can carry on the business of Banking/ Non banking or financial institution. They are engaged only in providing stock broking service. No part of their business is receipt of deposits or lending money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Ind. Ltd. 2000 (124) ELT 659, M/s Jindal Praxair Oxygen Co. Ltd. 2007 (208) ELT 181 and M/s Inox Air Products Ltd. 2001 (134) ELT 224 to support his contention that the delayed payment charges are in the nature of liquidated damages and hence not the consideration for provision of service. Rule 6 (3B) has no applicability as it is specially carved out for non banking financial service which is not the case as they have to receive any consideration for any banking/non banking or financial activity. He also submits that the demand of service tax on the ground of utilization of alleged non available cenvat is nothing but duplication of demand. He relies upon the judgment in case of M/s City Centre Mall Nashik Pvt. Ltd. 2017 - TIOL - 4322 - C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is exempted service hence the 50% of Cenvat availed on input and input services is liable to be reversed in terms of Rule 6(3B) of the CCR, 2004. We find that first of all the show cause notice and the impugned order has nowhere shown that the income has arisen due to any service related to "Banking & Financial Service". The Appellant has not lent any money to any person. The activity of a banking and financial service concern has been well defined under the RBI Act, Banking Regulation Act and section 65 (12) of the Finance Act, 1994. It is an undisputed fact that the Appellant is not doing any banking or financing or leasing activity. The interest earned has to be from deposit, loans or advances when the activity is of "Banking & Othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of outstanding dues from the client and certificate issued by the Chartered Accountant. The said documents clearly define the nature of income. Hence in no circumstances the interest income can be defined as outcome of banking and other financial service. 6. We are therefore of the view that the interest arising due to late payment of dues by the clients to the Appellant would not fall under the category of Banking & other Financial service. Our views are also based upon the judgment in case of M/s Karvy Consultants Ltd. vs. Assistant Commissioner of Customs & Central Excise, Hyderabad - II, 2006 (1) STR 7 (AP) wherein the Hon'ble Court held as under : "18. Though the counter-affidavit places reliance solely on the certificate of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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