Mutuality principle excludes member-only services of an incorporated cooperative society from service tax under banking services.

An incorporated cooperative society providing lending and deposit-related services exclusively to its members was treated as outside the service tax net for the relevant period under the principle of mutuality. The Tribunal followed the view that such a society is an incorporated entity and that member-only services, in the statutory context using the expressions "body of persons" and "person," did not amount to taxable service under Banking and Other Financial Services. It also relied on an earlier batch decision involving similar cooperative societies. The impugned tax demand, confirmation of tax, and penalties were unsustainable, and the order was set aside with consequential relief.

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Issues: Whether a registered cooperative society providing lending and deposit-related services exclusively to its members is liable to service tax under the category of Banking and Other Financial Services.

Analysis: The dispute was governed by the principle of mutuality and the treatment of incorporated bodies under the service tax law. The Tribunal followed the binding view that a cooperative society registered under the relevant cooperative societies law is an incorporated entity and that services rendered exclusively to members do not amount to taxable service in the hands of such an incorporated association when the statutory scheme uses expressions like "body of persons" and "person" in a manner that does not bring such entities within the tax net for the relevant period. The Tribunal also applied the earlier decision already taken in a similar batch of appeals involving cooperative societies, which had held that member-only services of an incorporated cooperative society were not exigible to service tax.

Conclusion: The society was not liable to service tax on the impugned member-only activities, and the demand, confirmation of tax, and penalties could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief according to law.

Ratio Decidendi: An incorporated cooperative society rendering services only to its members does not fall within the service tax net on the basis of mutuality for the relevant statutory scheme.

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