2016 (1) TMI 974

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....ecipient of the said foreign exchange, like banks, customers etc; that UBI was paying commercial considerations to SWIFT for hiring the said services periodically. A show cause notice was issued wherein it was contended that the said services rendered by SWIFT to UBI appeared to amount to a taxable service classifiable under the category of "Banking and Other Financial Services" under sub clause (vii) of Section 65 (12) "provision and transfer of information and data processing" are liable to service tax from 16-7-2011. In the show cause notice, it was also contended that as per Rule 2(1)(d)(iv) of Service Tax Rules, 1994, as it existed w.e.f. 16-8-2002 and the subsequent introduction of Section 66 A of the Finance Act, 1994, the person liable for paying ST means -"in relation to any taxable service provided by a person receiving taxable service in India". Therefore, the liability to discharge ST on the said taxable services appeared to lie on UBI. The show cause notice culminated into adjudication order, wherein the Ld. Adjudicating authority confirmed the charges proposed in the show cause notices. Being aggrieved by the said Adjudication orders, the Assessee filed appeals before....

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....s under: 5. We have carefully considered the submissions made by both the sides. The demand of service tax was confirmed on the appellant under the category of Banking and Other Financial Services. Definition of the same is reproduced below: "Banking and Other Financial Services" means Section 65 (12): (a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or any other person namely :- (i)  financial leasing services including equipment leasing and hire-purchase; (ii) credit car services (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking, (v) asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, but does not include case management; (vi) advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; (vii) provision and transfer of i....

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....oes it store financial information on an on-going basis. As a data carrier, SWIFT transports messages between two financial institutions. This activity involves the secure exchange of proprietary data while ensuring its confidentiality and integrity. As per the history of SWIFT available in the said website, SWIFT started the mission of creating a shared worldwide data processing and communications link and a common language for international financial transactions. The services provided by SWIFT involves providing of information related to financial transactions viz. transfer of funds; transfer of information contained in the said message after processing the data contained therein. Data processing in any computer is a process that converts data into information. The data contained in the said financial message when presented for processing is raw data which when processed become useful information for the customers viz. banks, financial institutions etc., who then use the said processed information to debit and credit the customers accounts accordingly, i.e., funds settlement between the banks. The computer network operating systems i.e., SWIFT network, installed at BOB, SWIFT Ne....

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....aid financial message, process the same and then transfer the processed information to the respective customers, i.e. presenting and recipient banks, financial institutions etc., as the case maybe. After the processing is complete in all respects, such processed data leads to settlement of funds between BOB and the recipient banks. It further appeared that messaging data through magnetic media or through communication backbone leads to data being transferred between two intended users related to the same financial transaction. 7.2 From the above detailed process involved, it is clear that the activities appear to amount to provision and transfer of information and data processing in relation to banking and other financial services, as defined under the Act and clearly covered under the entry provided in sub-clause (a)(vii) of Section 65(12) i.e. "provision and transfer of information and data processing". 7.3 As regards the contention of the appellant that SWIFT does not fall under the category of 'banking and other financial institution's as SWIFT is not engaged in the business of banking and other financial services, we find that if any person provides t....

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....of actual quantum of service provided to the banks. The banks are not paying some subscription to the SWIFT but they are paying towards the actual quantum of services received by them from SWIFT. In view of this fact, it is clear that the transaction between the Bank and the SWIFT is purely a business transaction; therefore the principle of mutuality does not exist in such transaction. The judgments cited by the Ld. Counsel stand distinguished in the above facts of the case. 7.6 As regards the submission of the appellant that present case is of revenue neutrality as the tax payable on the subject service is cenvatable, we are of the view that the bank is providing various services, some of the services are taxable and some are exempted. Therefore, it cannot be decided that the entire service tax payable on services of SWIFT can be allowed as Cenvat Credit. We do not agree that it is a case of revenue neutrality. However if the appellant, is able to satisfy the concerned jurisdictional authority that the service is used for providing the taxable services, Cenvat Credit shall be allowed. On limitation, the appellant claim that the demand is time barred on the ground that Ld.....