Mutual funds treated as goods for service tax exemption, supporting refund for commission agents under the notification.

Mutual funds were treated as "goods" by applying the Sale of Goods Act definition of movable property, excluding actionable claims and money, so the exemption under Notification No. 13/2003-S.T. was held available. The circular later relied on by the department had already been set aside by the Andhra Pradesh High Court, and no stay was shown against that ruling, so the High Court position was taken as prevailing. On that basis, refund of service tax paid by commission agents of mutual funds was upheld in favour of the assessee.

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Issues: Whether mutual funds are "goods" for the purpose of Notification No. 13/2003-S.T. dated 20/06/2003, and whether refund of service tax paid by commission agents of mutual funds was admissible.

Analysis: The lower appellate authority relied on the definition of "goods" in clause (7) of Section 2 of the Sale of Goods Act, 1930, under which goods include every kind of movable property other than actionable claims and money. On that basis, mutual funds were treated as goods and the benefit of Notification No. 13/2003-S.T. was held available. The circular dated 05/11/2003 issued by the CBEC had already been set aside by the Andhra Pradesh High Court in Karvy Securities Ltd. and no stay of that decision was shown. The prevailing legal position was therefore taken to be the High Court's ruling.

Conclusion: Mutual funds were held to be goods for the purpose of the notification, and the refund of service tax was upheld in favour of the assessee.

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