2018 (8) TMI 1279 - AT - Service Tax

Tribunal overturns service tax demand on chit fund services following Supreme Court ruling

The tribunal set aside the Commissioner's orders confirming service tax demand on chit fund services, as the Supreme Court's judgment directly applied to ... Demand of service tax - services rendered by the appellants in relation to chit funds - benefit of N/N. 6/2005 dt. 01/03/2005 as amended - Held that:- Reliance placed in the Apex Court decision in the case of UNION OF INDIA AND ORS. VERSUS M/S. MARGADARSHI CHIT FUNDS (P) LTD. ETC [2017 (7) TMI 224 - SUPREME COURT OF INDIA], where it was held that the chit funds business was not covered by sub-clause (v) of sub-section 12 of Section 65 even after its amendment by Finance Act, 2007. Appeal allowed - decided in favor of appellant. Issues involved:Appeals against demand of service tax on chit fund services during different periods.Analysis:1. Identical Issue in Appeals:All 5 appeals were filed against Commissioner's orders confirming service tax demand on services related to chit funds during different periods. The issue was identical in all appeals, leading to a common disposal.2. Facts of the Case:The appellant, engaged in chit business, voluntarily filed a return under VCES-1, declaring service tax dues for a specific period. However, due to exceeding foreman commission, they appeared ineligible for the small service provider exemption, mis-declaring their tax liability. The appellant was alleged to have contravened various sections of the Finance Act, leading to a show-cause notice demanding payment and penalties.3. Contentions and Submissions:The appellant contested the show-cause notice, citing a High Court decision stating chit fund services were not taxable. Reference was made to judicial precedents, including a Supreme Court judgment and a Kerala High Court case, supporting the non-taxability of chit fund services.4. Court's Decision:After hearing both parties, the tribunal found the Supreme Court's judgment directly applicable to the present cases. The apex court's decision affirmed the Andhra Pradesh High Court's ruling, which the appellant had relied on. Additionally, the tribunal noted the Kerala High Court's contrary judgment was overruled by the apex court. Consequently, the tribunal held the impugned orders were not sustainable in law and set them aside, allowing all appeals with any consequential reliefs.This detailed analysis of the legal judgment highlights the issues involved, the factual background, arguments presented, and the tribunal's decision based on relevant judicial precedents and legal considerations.