TMI Blog2021 (3) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... a body corporate but this body corporate is definitely not constituted under the Companies Act but by Rajasthan Government to have perpetual succession and a common seal with power to acquire hold and dispose of property both moveable and immovable and to enter into contracts and may by its corporate name sue and be sued and do all things and acts necessary for the purpose of Rajasthan Housing Board Act (RHB). RHB , otherwise also, cannot be called as Banking Company. The definition of Banking company as per Section 65 (11) of Finance Act, 1994. Section 5 (c) of Banking Regulation Act, 1949 clarifies that any company, which is engaged in manufacture of goods or carries own any trade and which accepts deposits of money from the public merely for the purpose of financing its business, as such manufacturer or trader shall not be deem to transit the business of banking. Once that is true even for a banking company, the appellant, who is not even the body corporate as defined under Section 16 (12) cannot be burdened with the tax liability for rendering Banking and other Financial Services , when it accepts deposits of money from the public merely for the purpose of financing the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Respondent ORDER RACHNA GUPTA The appellant, in the present appeal, the Rajasthan Housing Board, Jaipur (hear-in-after called as RHB ) is engaged in construction of residential houses from loan sanctioned by HUDCO and other financial institutes and allotting these houses on hire purchase sale and outride sale basis to the consumers against collection of the amounts as follows:- 1. Ancillary service charges to meet out additional overheads levied by HUDCO and other financial institutes. 2. Hire purchase deposits from its consumers Purchasing houses/flats on hire purchase. 3. Interest for flats/houses allotted on hire purchase. 4. Administrative charges on registration of transfer of hire purchase lease. 2. Department alleged that activity of collection of above said charges is covered under definition of Banking and other Financial Services as mentioned under Section 65 (12) of the Finance Act, 1994. 3. In view of these observations / allegations, Department has served the appellants with following three Show Cause Notices for the respective period and the quantum of demand:- Sl. No. SCN No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant in the cities of the Rajasthan. It is submitted that the said fund is not at all the income of the appellant. The Income Tax assessments for appellant for the relevant years also support that these are not the incomes of the Board, rather are in the nature of liability or deposit. Hence, cannot be held to be liable to service tax, for it not being consideration at all for any of the services. 6.2 Learned Counsel has further impressed upon that the Service Tax liability has wrongly been levied on interest received. It is submitted that the financial transactions where consideration is represented by way of interest or discount are in negative list, section 66D (n), and hence, is not taxable w.e.f. 01.07.2012. For the period prior this date also, interest received is denied to be subject to the service tax, as being specifically excluded under section 67 of Finance Act, 1994. It is submitted that sale of house under Hire Purchase Scheme does not alter the nature of activity, which is primarily sale. Since the sale of house remains to be a non-taxable service, such hire purchase sale can also cannot be covered as taxable. It, is accordingly, submitted that all the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants were collecting the amount in ASC charges and thereafter were transferring the same to ASC Fund. It is mentioned that original adjudicating authority has rightly confirmed that transfer of any amount to any other head after collection of the said amount does not change the service tax liability, which is based on services rendered and the amount collected for the same and has no meaning in relation to the utilization of the fund thereafter. Learned Authorised Representative has placed reliance upon the findings in para 5.1.5 of the impugned appeal. With these submissions, the correctness in the order under challenge is impressed upon and appeal is prayed to be dismissed. 8. After hearing the parties and perusing the record of the impugned appeal, the moot question to be decided is as to whether services rendered by the appellant are taxable being the Banking the Financial Services . To adjudicate foremost we need to look into the definition of Banking and Financial Service . Section 65 (12) of Finance Act, 1994, defines Banking and other Financial Services as under:- Banking and Other Financial Services means (a) the following services provided by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that for any service to be a Banking and Financial Service it has to be rendered by either: Banking Company or Financial Institute including a non-banking financial company or Body Corporate or Commercial concern Any of these concerns should be rendering any of such service as are mentioned in sub-clauses (a) (i) to (ix) of Section 65 (12) of the Finance Act, as mentioned above. 10. We observe that the Original Adjudicating Authority has confirmed the demand keeping in view that the service in question has been rendered by the appellant being a body corporate. The meaning of body corporate stands defined under Section 65 (14) of Finance Act, 1994 as under:- Body corporate shall have the meaning assigned to it in Clause (7) of Section 2 of the Companies Act, 1956 (1 of 1956). Para h to clause (7) of section (2) of the Companies Act, 1956 reads as follows:- body corporate or corporation includes a company incorporated outside India, but does not include (a) a corporate sole; (b) a co-operative society registered under any law relating to co-operative societies; and (c) any other body corporate (not being a company as defined und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts business, as such manufacturer or trader shall not be deem to transit the business of banking. Once that is true even for a banking company, the appellant, who is not even the body corporate as defined under Section 16 (12) cannot be burdened with the tax liability for rendering Banking and other Financial Services , when it accepts deposits of money from the public merely for the purpose of financing the sale of houses being constructed by it. 14. Definition of Financial Institute as per Section 65(45) of the Finance Act, 1994 should have the meaning as assigned to it in clause (c) of Section 45 - 1 of the Reserve Bank of India Act, 1934. From sub-clause (iv) thereof it is clear that this definition does not include any institution, which carries on as its principal business,- (a) xxxxxxxxx (b) xxxxxxxxx (c) The purchase, construction or sale of immovable property, so however, that no portion of the income of the institution is derived from the financing of purchase, constructions or sales of immovable property by other persons; 15. Further we observe that when one activity is claimed to fall under two different kinds of taxable services Section 65A(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refundable or adjustable at a future date since the same could not have been done during the period in question that they were shown as liability in the balance sheet of the appellant. The balance sheet on record when seen with other documents on record makes it clear that the findings in para 5.15 are against the facts of the case and against the said documentary evidence. It is no where denied that the said deposits are being used by the appellant for the construction of Government Primary School, Dispensary, Police Chowki, Fire Station etc. as are required for the overall development of public facilities in the township as created by the appellant. 19. In view of the above discussion, we hold that the appellant is neither such a body corporate as is required for Section 65 (12) of Finance Act, 1994 nor the funds as that of ASC charges and hire purchase charges are the income of the appellant, who is held to be engaged in rendering construction services as contrary to Banking and Financial Services. 20. In the case of CCE, Pune vs. Kesar Petro Product Ltd. reported in 2014 (33) STR 646, wherein it was held that where a number of services were rendered by the assessee, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise the service rendered by the appellant is that of Construction of Complexes . 25. We also observe that the findings of the Adjudicating Authority below and also the allegations of three of the impugned show cause notices are contradictory to an earlier show cause notice bearing No.ST/206/2012/1944 dated 03.10.2012 for the period 01.07.2010 to 31.12.2011. The ACS fund received by the appellant during that period was alleged to be assessed under construction of complex services. 26. Coming to the allegations of suppression of facts, we are of the opinion that there has to be a positive act of suppression apparent on part of the appellant along with an apparent intention to evade the payment of tax and there has to be a wilful misstatement as was held by Tribunal, Mumbai in the case of Centre for Development of Advance Computering vs. CCE Mumbai - 2016 (41) STR 2008. The Adjudicating Authority below is observed to have failed to show any such positive act. Admittedly, the appellants were submitting their returns regularly. No question of suppression otherwise is possible. Department has failed to reflect any wilful misstatement. Appellant, admittedly, is an instrumentality ..... X X X X Extracts X X X X X X X X Extracts X X X X
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