Appellants Exempt Under Notification No. 25/2004, Service Tax

The Tribunal found the appellants eligible for exemption under Notification No. 25/2004-Service Tax as they were not a banking company or financial institution. Consequently, the imposition of Service tax and penalty was deemed unjustified, leading to the setting aside of the impugned order. The appeal was allowed with any consequential relief.

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Issues:
1. Service tax liability for services rendered to a bank's customers without registration.
2. Applicability of exemption Notification No. 25/2004-Service Tax dated 10-9-2004.

Analysis:
1. The appeal was filed against the Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals), Cochin, regarding the demand of Service tax amounting to Rs. 3,38,661/- under Business Auxiliary Services. The appellants provided services to a bank's customers without registering for Service tax. The original authority confirmed the demand, including interest and penalty. The Commissioner (Appeals) upheld the decision. The appellants argued that they were exempt under Notification No. 25/2004-Service Tax dated 10-9-2004 for services provided before September 10, 2004. The Tribunal found the appellants eligible for exemption as they were not a banking company or financial institution. Consequently, the imposition of Service tax and penalty was unjustified, leading to the setting aside of the impugned order.

2. The appellants claimed exemption under Notification No. 25/2004-Service Tax dated 10-9-2004, which exempted services provided to a customer by any body corporate or commercial concern other than a banking company or financial institution in relation to banking and financial services. The Tribunal agreed that the appellants fell under this exemption category. Despite the appellants' claim before the authorities, the issue was not examined, and the Commissioner (Appeals) did not provide reasoning for denying the exemption. The Tribunal noted that the appellants began paying Service tax under Business Auxiliary Services after September 10, 2004. As the appellants were covered by the exemption notification for the relevant period, the imposition of Service tax and penalty was deemed unjustified. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

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