Service tax exemption for bank facilitation services upheld under Notification No. 25/2004-ST for the disputed period

An appellant acting as a facilitator between a bank and its customers was held to have rendered services on behalf of the bank in relation to banking and other financial services, bringing the activity within Notification No. 25/2004-ST. Since the conditions of clauses (d) and (e) were satisfied for the disputed period, the exemption applied and service tax was not payable. The demand raised under Business Auxiliary Service was therefore unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 25/2004-ST for services rendered to the bank and whether service tax was payable for the disputed period.

Analysis: The agreement showed that the appellant acted as a facilitator between the bank and its customers and rendered services on behalf of the bank in relation to banking and other financial services. The disputed period fell within the scope of the exemption notification, and the appellant satisfied the conditions of clauses (d) and (e) of Notification No. 25/2004-ST.

Conclusion: The appellant was entitled to the exemption and was not liable to pay service tax for the disputed period. The demand under Business Auxiliary Service was unsustainable.

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