Chit fund retention amounts are not taxable as banking and other financial services, following Supreme Court guidance.

Amounts retained by a chit fund manager while conducting chit fund services were considered in the context of service tax under banking and other financial services. The Tribunal noted that the issue was no longer res integra because the Supreme Court had already held that such retained amounts are not taxable under that category. On that basis, the service tax demand on the retained portion could not be sustained.

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Issues: Whether the amount retained by the chit fund manager while conducting chit fund services is liable to service tax under the category of banking and other financial services.

Analysis: The dispute related to service tax demand on the portion of the chit amount retained by the appellant. The Tribunal held that the issue was no longer res integra in view of the Supreme Court ruling which had categorically determined that amounts retained by a chit fund manager in such activities are not taxable under the category of banking and other financial services.

Conclusion: The retained amount was not liable to service tax and the demand could not survive.

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