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May 2016

[2016-TIOL-26-SC-ST] Commissioner of Central Excise, Customs & Service Tax vs. Federal Bank Ltd.

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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I. Supreme Court

When a service is specifically excluded from the purview of service tax, the authorities cannot levy service tax indirectly under general charging head “business auxiliary service”

Facts
The Respondent Bank provided services such as collection of telephone bills, collection of insurance premium on behalf of the client companies etc. The High Court and the Tribunal dismissed the appeal of the department and held that section 65(12) of the Finance Act, 1994 viz. banking and financial services covered all charging services rendered by the Banks. It was further held that services rendered essentially of cash management were excluded from the definition during the relevant period and therefore were not liable to be charged under any other general charging head. Aggrieved by the same, the present appeal was filed.

Held
The Supreme Court agreed with the views expressed by the High Court, for the reason that the same were in consonance with section 65A of the Finance Act, 1994.

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