TMI Blog2008 (7) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... nies are members. In the writ petitions, the petitioners sought for a mandamus and assailing the correctness of Circular No. 96/7/2007-ST (Circular No. 034-04) dated 23-8-2007 and proceedings No. HAST 141/2007, dated 18-12-2007 issued by the second respondent as being violative of Arts. 14,19(l)(g) and 265 of the Constitution of India and section 65(12) read with section 65(105)(zm) of the Finance Act, 1994 and to set aside the same. The case of the petitioners is that they are doing business in chit funds, the transactions of which are clearly covered by the provisions of the AP Chit Funds Act, 1971 and the rules made thereunder. According to them, the very nature of transaction stands quite apart. In support, the petitioners referred to various provisions of the said Act. 3. Under Chapter V of the Finance Act, 1994, the first respondent for the first time, imposed the levy of service-tax on rendition of service by the provider of service to the receiver. Clause (12) of section 65 of the said Act, defines banking and other financial services and sub-clause (v) thereof refers to asset management . It is stated that it does not include the cash management. It is pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that even culling out from the definition of chit under the Chit Funds Act, 1982, there being an element of finance involved, it attracts cash management and asset management. Further, it has been pointed out that as per section 41(1) of the RBI Act, 1934, chit funds are categorised as financial institutions and therefore clause (12) of section 65 of the Finance Act, 2007 by deletion of expression cash management attracts the levy of service tax on chit fund transactions. It is also pointed out that the RBI clarified in this regard and it is only on the guidelines and advise of the Reserve Bank, the impugned circulars have been issued and therefore there is absolutely no illegality in the entire action of the respondents. Further it is pointed out that the petitioners have an alternative remedy of appeal and adjudication at various stages to raise these objections and without availing the same, the invocation of extraordinary jurisdiction of this Court under Article 226 of the Constitution of India is wholly unsustainable, hence these writ petitions are liable to be dismissed. 5. Sri N. Venkataramana learned senior counsel appearing on behalf of the petitioner, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 65 of the Finance Act, 2007, and consequently whether the impugned circular issued by the respondents is valid? 9. At the outset, for convenience sake, instead of referring to all the provisions under the Chit Fund Act, 1982 it would suffice to refer to the definition of chit under section 2(b) thereof, which reads as under: 2(b) 'Chit' means a transaction whether called chit, chit fund, chitty, kury or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as B determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount. 10. The nature of chit transaction has come up for consideration before the Apex Court in Shriram Chits Investment (P.) Ltd. v. Union of India AIR 1993 SC 2063, wherein, it has been held as under: The provision in section 6 relating to entering into chit agreement clearly shows that a contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit card services; (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking; (v) asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, but does not include cash management; (vi) advisory other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; and (vii) provision and transfer of information and data processing; (b) foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); 12. It has been the argument of the respondents that since the nature of chit transactions falls within the expression of cash management and sub-clause (v) of the above provision excludes the same, there was no levy of service tax on the said transactions. The aforesaid provision had undergone a change by way of an amendment under the Finance Act, 2007, with effect from 1-6-2007 in sub-clause (v), by which, the expression but does not include cash management was omitted. Therefore, it is the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction or business specifically. There cannot be any dispute that the very nature of business and transaction under the chits as can be culled out from the provisions of the Chit Fund Act and as explained to by the Apex Court in Shriram Chits Investment (P.) Ltd.'s case (supra), stands on its own as a class. It does not have any parlance or similarity to that of normal transactions as one understood under the law or commercially. Admittedly, there is no provision whatsoever by including specifically chits within the meaning of either cash management or asset management . Therefore, irrespective of such amendment either by earlier inclusion or later exclusion of those expressions it will not have bearing on the chit transaction. 15. The respondents placed reliance on the online dictionary meaning in support of their contention that the nature of chit transactions falls within the meaning of cash management , which is as under: - http:/ /ardictionary.com/fund/6980 Fund Definition: an aggregation or deposit of resources from which supplies are or may be drawn for carrying on any work, or for maintaining existence. Fund 2 Definition : A stock or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 524 (HL)]. Tax and equity are strangers and an equitable construction cannot be put upon the words of a taxing statute. [Partington v. Attorney General (supra), IRC v. Granite City Steamship Co. Ltd. 13 Tax Cases 1, 16, CIT v. S.K. Sahana Sons [1946] 14 ITR 106 (Pat.), P.A. Raju Chettiar Brothers v. CIT [1949] 17 ITR 51 (Mad.), CIT v. Sri Ram Sugar Mills Ltd. [1952] 21 ITR 191(Mad.)]. In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. [Per Rowlatt J. Cape Brandy Syndicate v. IRC [1921] 1 KB 64,71: [1920] 12 Tax Cases 358,366, approved in CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC), CIT v. Shahzada Nand Sons [1966] 60 ITR 392 (SC), Smt. Tarulata Shyam v. CIT 1977 CTR (SC) 275 : [1977] 108 ITR 345 (SC), Canadian Eagle Oil Co. Ltd. v. King 27 Tax Cases 205, 248 (HL), Mapp (Inspector of Taxes) v. Oram 45 Tax Cases 651, 682 (HL): [1970] 75 ITR 411, 424 (HL)]. 17. In Government of Andhra Pradesh v. Smt. P. Laxmi Devi [2008] 2 SCJ 723 the Apex Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
