2014 (3) TMI 228 - AT - Service Tax

Broker entitled to service tax refund pre-amendment date; post-amendment payments not eligible

The Tribunal held that the appellant, a broker for mutual funds, was entitled to a refund of service tax paid before a specific amendment date but not ... Denial of refund claim - Business Auxiliary Services - Eligible for the benefit of Notification No. 13/2003-S.T. - Held that:- The lower appellate authority has come to the conclusion that the appellant is eligible for benefit of Notification No. 13/2003-S.T. as mutual funds are goods as defined in Section 65(50) of the Finance Act. However, the said order does not take into account the amendment made to the said notification vide Notification No. 8/2004, dated 9-7-2004. Vide Notification No. 8/2004, the scope of exemption has been restricted to the services rendered by a Commission Agent in relation to the sale or purchase of agricultural produce. In other words, in respect of Commission Agent dealing with mutual funds, the benefit of Notification No. 13/2003 would apply only for the period prior to 9-7-2004. Since in the present case, the refund pertains to the period July, 2003 to September, 2004 as mentioned in the show-cause notice, it has to be held that for the period from 9-7-2004 to September, 2004, the benefit of Notification No. 13/2003 would not be available to the appellant and therefore, if any service tax has been paid on services rendered during the said period, the appellant will not be eligible for the benefit of refund. Appellant is eligible for refund of Service Tax period prior to 9-7-2004 in accordance with law. However, for the period subsequent to 9-7-2004, the appellant would not be eligible for any refund. Therefore, we remand the matter back to the original adjudicating authority to consider afresh the appellant’s claim for eligibility to refund in respect of the Service Tax paid for the period 9-7-2004 to September, 2004 after giving a reasonable opportunity to the appellant of being heard - Decided in favour of Revenue. Issues: Service tax liability on services rendered, eligibility for exemption under Notification No. 13/2003-S.T., scope of exemption post-amendment, applicability of Circular No. 66/15/2003-S.T., definition of goods under the Sale of Goods Act, refund claim, subsequent refund and show-cause notice, sustainability of lower appellate authority's order.Analysis:1. Service Tax Liability and Exemption Eligibility: The case involved a broker for mutual funds who claimed a refund of service tax paid, citing Notification No. 13/2003-S.T. granting exemption to Commission Agents in Business Auxiliary Services. The lower appellate authority allowed the refund, considering mutual funds as goods under the Sale of Goods Act. However, the Revenue argued that the exemption was limited post-amendment to services related to agricultural produce, not mutual funds. The Tribunal noted the amendment and held that the exemption under Notification No. 13/2003 applied only until 9-7-2004 for services concerning mutual funds.2. Circular No. 66/15/2003-S.T. and Legal Precedence: The Revenue referred to Circular No. 66/15/2003-S.T., stating that services by mutual fund distributors were not eligible for the exemption. The Circular was challenged in court and set aside, indicating ambiguity. The Tribunal acknowledged the legal uncertainty but emphasized the need to follow the law as it stood post-amendment, restricting the exemption scope.3. Definition of Goods and Refund Claim: The appellant argued that mutual funds fell under the definition of goods, justifying the exemption claim. Additionally, the appellant had received a refund for the service tax paid, with a subsequent show-cause notice for refund recovery. The Tribunal noted the refund approval but highlighted the need for a fresh assessment for the period post-amendment to determine eligibility.4. Judgment and Remand: The Tribunal concluded that the appellant was entitled to a refund for the period before the amendment but not afterward. The case was remanded to the adjudicating authority for a reassessment based on documentary evidence. The decision aimed to ensure compliance with the law and provide a fair opportunity for the appellant to present their case.5. Cross Objection: The Tribunal also disposed of the cross objection filed by the Respondent, concluding the overall proceedings related to the case. The judgment clarified the applicability of the exemption, the legal context post-amendment, and the procedural steps for reassessment, ensuring a thorough and lawful resolution of the dispute.