Tribunal: ATM Services Not Taxable Pre-2006

M/s. India Switch Company Pvt. Ltd. Versus CST, Chennai

M/s. India Switch Company Pvt. Ltd. Versus CST, Chennai - 2015 (39) S.T.R. 288 (Tri. - Chennai) Issues Involved:
1. Classification of ATM services under 'Banking and Other Financial Services' (BOF) prior to 01.05.2006.
2. Applicability of service tax on ATM services before the introduction of a specific category for ATM services on 01.05.2006.
3. Legitimacy of the penalties imposed under sections 76 and 77 of the Finance Act.

Issue-wise Detailed Analysis:

1. Classification of ATM services under 'Banking and Other Financial Services' (BOF) prior to 01.05.2006:
The appellants contended that ATM services were specifically introduced in the Finance Act from 01.05.2006, and prior to that, these services were not covered under any listed services, thus not liable for service tax. The Department argued that the services fell under 'Financial Leasing Services including equipment leasing' and 'Provision and Transfer of Information and Data processing' under BOF services. The Tribunal found that the ATM services provided by the appellants involved activities such as site preparation, installation, and maintenance of ATMs, among others, which did not fit the definition of financial leasing or equipment leasing. The Tribunal cited previous rulings, including NCR Corporation India Pvt. Ltd. Vs. CST, Bangalore, which held that ATM services were not chargeable to service tax prior to 01.05.2006.

2. Applicability of service tax on ATM services before the introduction of a specific category for ATM services on 01.05.2006:
The Tribunal noted that a separate category for ATM services was introduced in the Finance Act effective from 01.05.2006, implying that prior to this date, ATM services were not subject to service tax. The Tribunal referenced the case of Diebold Systems (P) Ltd. CST, Chennai, which concluded that ATM services were not taxable before the introduction of the specific category. The Tribunal emphasized that once a service is introduced as a separate category, it cannot be retrospectively taxed under a different category.

3. Legitimacy of the penalties imposed under sections 76 and 77 of the Finance Act:
The adjudicating authority had imposed penalties on the appellants under sections 76 and 77 of the Finance Act for the alleged non-payment of service tax. However, given the Tribunal's conclusion that ATM services were not taxable prior to 01.05.2006, the basis for the penalties was invalid. The Tribunal set aside the penalties, following the rationale that the appellants were not liable for service tax on ATM services during the disputed period.

Conclusion:
The Tribunal concluded that the appellants' provision of ATM services did not fall under the category of 'Banking and Other Financial Services' prior to 01.05.2006. Consequently, the service tax demands and penalties imposed by the adjudicating authority were set aside. The Tribunal allowed the appeals with consequential relief, affirming that no service tax was leviable on ATM services before 01.05.2006, based on the introduction of a specific category for such services from that date.