Non-banking financial company status for service tax turns on principal business, not RBI registration alone.

Liability under the service tax entry for a non-banking financial company depends not merely on RBI registration but on whether the entity satisfies the statutory definition by carrying on, as its principal business, the receiving of deposits or lending of money. A registration certificate alone is insufficient to establish that condition. The relevant factual enquiry must be made on the basis of the material on record and the reply to the show cause notice, rather than by assuming the statutory status from registration alone. The departmental authority must therefore examine the principal-business test afresh before proceeding further.

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Issues: Whether the petitioner could be treated as a non-banking financial company for service tax purposes merely on the basis of its RBI registration, and whether the proposed service tax demand and consequential proceedings could proceed without examining whether its principal business was receiving deposits or lending.

Analysis: Liability under the relevant service tax entry depended not only on registration as a non-banking financial company but also on satisfaction of the statutory definition requiring that the company carry on, as its principal business, the receiving of deposits or lending of money. A registration certificate by itself was held insufficient to establish that condition. The material relied upon by the department and the contents of the show cause notice indicated that the real factual enquiry was whether, during the relevant period, the petitioner's principal business answered that statutory description. That question had to be determined on the basis of material and the petitioner's reply to the notice, rather than by assumption from the registration certificate alone.

Conclusion: The petitioner was not liable to be treated as a non-banking financial company solely because of the RBI registration, and the matter required fresh consideration by the departmental authority on the relevant factual material.

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