TMI Blog2018 (11) TMI 1673X X X X Extracts X X X X X X X X Extracts X X X X ..... r Notification No.22/2006-S.T. dated 31.05.2006 from payment of service tax on taxable services provided to or by RBI. It has further been held that as an agent of RBI, since the scheduled bank is transacting sovereign Government business, the same should not be subjected to levy of service tax. Appeal allowed - decided in favor of appellant. - Appeal No. ST/85596/2015 - A/88429/2018 - Dated:- 16-11-2018 - Mr. S.K. Mohanty, Member (Judicial) And Mr. P. Anjani Kumar, Member (Technical) Shri Sachin Chitnis, Advocate, for appellant Shri Dilip Shinde, Assistant Commissioner (AR), for respondent ORDER Per: S.K. Mohanty This appeal is directed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the appellant, seeking for confirmation of the service tax demand. The matter was adjudicated vide order dated 16.06.2010, wherein service tax demand of ₹ 42,02,486/- along with interest was confirmed against the appellant. The service tax amount of ₹ 37,73,547/- with interest amounting to ₹ 8,70,684/- already paid by the appellant before adjudication of the matter was appropriated against such confirmed demands. Besides, the order also imposed penalties under Section 76, 77 and 78 of the Act ibid. On appeal, the learned Commissioner (Appeals) vide the impugned order dated 28.03.2014 has upheld the adjudged demand confirmed on the appellant. 3. Learned Advocate appearing for the appellant submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further been held that as an agent of RBI, since the scheduled bank is transacting sovereign Government business, the same should not be subjected to levy of service tax. The relevant paragraphs in the said decision of the Larger Bench are extracted herein below:- 7. The issue that falls for consideration of this Larger Bench is whether the respondent herein is eligible for the benefit of exemption Notification No. 22/2006-S.T., dated 31-5-2006. The respondent herein is a public sector/nationalized bank established under Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and as defined in the State Bank of India (Subsidiary Banks) Act, 1959 and is authorized to collect the taxes payable by the citizen o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government) may hold at such places such balances as (it) may require. 7.3 It may be noticed from the reproduced section, only RBI can transact the Government business in India which is to receive and also remit all the money on behalf of the Government of India. Section 21A of the RBI Act also empowers the RBI to transact Government business of States on agreement. Holistically, reading of Sections 20, 21 and 21A of the RBI Act, would mean that RBI is supposed to receive all money on behalf of Govt. of India and remit the same and no one else is authorized to do so. If this be so, various taxes like collection of central excise, customs and service tax and amounts collected by sale of public deposit, RBI bonds, spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emphasis supplied) 7.4 On careful reading of above reproduced Section 45, it can be noticed that, RBI, under the direction of Central Government of India having regard to public interest, convenience of banking and other factors, can appoint a national bank or the State Bank to transact business as its agent at any place in India. Drawing power from this Section, RBI appoints various national banks/ public sector banks for collection of various taxes and making payment of pension, etc. This would mean that various national banks are agents of the RBI. 7.5 The Central Govt. of India by Notification No. 22/2006- S.T. has given exemption from the payment of service tax of any taxable services provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RBI is exempted from the service tax liability in respect of various services, its agent for doing such services also needs to be extended the same benefit. 7.7 We may also look at the present controversy from another angle. State Bank of Patiala has been appointed by RBI as its agent under Section 45 of the RBI Act. RBI itself has been entrusted by the Central Government to transact Government business. Hence, once State Bank of Patiala has been appointed as agent of RBI, it is transacting Government business which is in the nature of a sovereign function performed on behalf of the Government and hence not liable to Service Tax. 7.8 In our considered view the judgment of the Tribunal in the case of Canar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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