RBI agent exemption under service tax extended to bank acting within authorised government business functions.

A bank acting as an RBI-appointed agent for Government business was treated as entitled to the same service tax exemption available to RBI because the agency relationship fell within the statutory scheme and the bank acted within the scope of its authority. The reasoning noted that finance law includes an agent within the ambit of an assessee and that RBI is empowered to appoint banks as its agents under the RBI Act. Accordingly, the exemption extended to the bank and the service tax demand could not be sustained.

---

---

Issues: Whether the appellant-bank, acting as an agent of the Reserve Bank of India for Government business, was entitled to the exemption from service tax available to RBI under the relevant exemption notification.

Analysis: The activity undertaken by the appellant was carried out in the capacity of an agent appointed by RBI for specified governmental functions. The Tribunal relied on the settled position that an agent, while acting within the scope of agency, can avail the same exemption as the principal where the principal itself is exempt and the statutory scheme recognises the agency relationship. It further noted that the finance law includes an agent within the ambit of an assessee and that RBI is empowered to appoint banks as its agents under the RBI Act. On that basis, the exemption available to RBI was held to extend to the appellant as well.

Conclusion: The appellant was entitled to the exemption and the service tax demand could not be sustained.

---