2015 (10) TMI 1578 - HC - Service Tax

Dispute Over Service Tax Liability Post-2006 Raises Questions on Bank Liability

The case involves a dispute over the demand for interest on Service Tax liability post-1-5-2006, which the petitioner had already paid. The respondent ... Demand of Interest – Service Tax liability paid under protest - Whether after payment of entire dues by the acquiring bank, still a demand can be made against the issuing bank is yet to be adjudicated? Held That:- Issue that has been decided by the Tribunal Mumbai so also at Delhi pertains to the period prior to 1-5-2006 - Clarification from Respondent sought whether on a representation made by the Indian Bank’s Association a decision has been taken by the C.B.E. & C. or not – Further affidavit required as to whether in fact a meeting was held between Indian Bank’s Association and Mr. Reddy, the Addl. Commissioner of Service Tax, Mumbai. Issues:1. Demand for payment of interest on Service Tax liability post-1-5-2006.2. Interpretation of judgments by CESTAT Mumbai and Delhi regarding Service Tax liability.3. Lack of adjudication on liability post-1-5-2006 in previous judgments.4. Communication between Indian Banks' Association and Service Tax department.5. Representation made to Central Board of Excise and Customs for clarification.6. Demand made by Respondent for further payment under protest.7. Issue of liability after payment by acquiring bank.8. Need for clarification on decisions by C.B.E. & C. and meeting with Service Tax department.Analysis:The judgment in question deals with a petition challenging a letter demanding payment of interest on Service Tax liability post-1-5-2006, which the petitioner has already paid. The respondent relies on judgments by CESTAT Mumbai and Delhi regarding Service Tax liability, emphasizing that the issue referred to the Larger Bench pertains to the taxability of acquiring banks for services rendered before 1-5-2006, with no clear adjudication on liability post that date. The communication between the Indian Banks' Association and the Service Tax department highlighted the complexity of the matter, suggesting a representation to the Central Board of Excise and Customs for clarification. The petitioner made a representation to the government seeking clarification on the issue. Despite the acquiring bank paying the Service Tax, the demand was made against the issuing bank, raising the question of liability post-payment by the acquiring bank. The court sought clarification from the respondents on decisions made by C.B.E. & C. and the meeting between the Indian Banks' Association representatives and the Service Tax department, indicating the need for further information before reaching a decision. The matter was adjourned for further proceedings.