By TIOL News Service

MUMBAI, JUNE 16, 2015: BOTH, assessee and Revenue are in appeals - assessee against an o-in-o and Revenue against a couple of o-in-a. All appeals involve the same issue and hence the Tribunal disposed them by a common order.

The assessee is aggrieved that the adjudicating authority confirmed a demand of Rs.53.74 lakhs under the category of "Banking and other Financial Services" for the period June 2007 to March 2008 by alleging that the appellant was undertaking "cash management". On the same issue, the Commissioner(A) had set aside the order of the lower authority and, therefore, Revenue is before the CESTAT.

In the matter of Stay application filed by the assessee the Tribunal had waived pre-deposit of the adjudged dues & granted stay. See 2011-TIOL-283-CESTAT-MUM.

The appeals were heard recently.

The appellant submitted that they were the successful bidder for collecting octroi on behalf of the Municipal Corporation of Dhule, Malegaon and Deolali; that they are entrusted with collection of octroi and transit fees and are required to pay to the Municipal Corporation /Cantonment Board an amount as per contract entered after successful Tender. It is further submitted that any amount which is collected over and above the contract amount is kept back by the appellant and in respect of transit fee the appellant is authorized to receive 3% of the amount collected as transit fee as a consideration. Moreover, as they are neither a financial institution nor a banking financial corporation, they are not liable to service tax under the said category, the appellant added. They also relied on the decision in Parag Parikh Financial Advisory Services Ltd. 2015-TIOL-287-CESTAT-MUM and submitted that cash management as defined in Law Dictionary is "efficient management of cash in a business in order to put the cash to work more quickly and to keep the cash in applications that produce income and collect all the cash put to them".

The AR submitted that the services rendered by the appellant is nothing but cash management as per the letter 334/1/2007-TRU dt. 28.2.2007 which specifically talks about services of collection of receivables. It is further mentioned that the definition of banking and financial services has undergone a change from 1.6.2007 wherein the activity of cash management has been included in the banking and other financial services.

The Bench extracted the definition of 'banking and other financial services' and 'financial institution' & observed -

++ Reading the definition of banking and financial services and the meaning of financial institution, we have to hold that the services rendered by the appellant would not fall under the category of service provided by a banking or a financial institution or any other body corporate or commercial concern. This our view is forfeited by the judgment of this Tribunal in the case of Parag Parikh Financial Advisory Services Ltd. (supra)…

++ In the case in hand, we find that it is undisputed as to the appellant is only collecting an amount as octroi from the vehicles, in which goods transported and octroi liability arises. In our view this will not encompass ingredients of cash management. In the absence of any cash management activity undertaken by the appellant, we find that the services rendered by the appellant will not fall under the category of banking and financial services.

++ It can be seen from the clarification (Circular No. 83/1/2006-ST dated 4.7.2006) that CBEC was of the view that any services to fall under the category of banking and financial services, the expression 'any other person' needs to be read "ejusdem generis" with the preceding words and the services are to be provided by any person should be similar to a bank or financial institution. In the case in hand, as is recorded by us, it is undisputed that appellant is not financial institution.

The assessee's appeal was allowed and the Revenue appeals were rejected.

(See 2015-TIOL-1142-CESTAT-MUM)