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December 2015

Service tax is not leviable on marketing of mutual funds and bonds. The decision by Andhra Pradesh High Court has set aside CBEC circular dated 05/11/2003 clarifying that these services are Business Auxiliary Services.

By Puloma Dalal
Jayesh Gogri
Mandar Telang, Chartered Accountants
Reading Time 1 mins
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38. 2015 (40) STR 187(Tri-Del.) Comm. of Service Tax Delhi vs. ABN Amro Bank.

Service tax is not leviable on marketing of mutual funds and bonds. The decision by Andhra Pradesh High Court has set aside CBEC circular dated 05/11/2003 clarifying that these services are Business Auxiliary Services.

Facts

The appellant was engaged in business of marketing mutual fund units and were also selling bonds issued by banking and non-banking companies. The first appellate authority on the basis of the Andhra Pradesh High Court judgement in case of Karvy Securities vs. Union of India 2006 (2) STR 481 granted relief. Revenue challenged the decision before the Tribunal citing the CBEC circular dated 05/11/2003 providing that the said activity is taxable.

Held

The Tribunal upheld the order and held that services are not taxable as CBEC circular dated 05/11/2013 was struck down by the Andhra Pradesh High Court in the case of Karvy Securities (supra).

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