TaxTMI 
TaxTMI 
2018 (7) TMI 1670
X X X X Extracts X X X X
X X X X Extracts X X X X
....l scale lending) to poor women members of self-help groups, and were charging interest on such loans apart from collecting various other charges like processing charge, application charges Group Maintenance Charges, etc., from the borrowers. It appeared to the Department that the activity would fall under 'Banking and Other Financial Services' and the appellants are liable to pay service tax. After investigations, Show Cause Notice was issued proposing to demand service tax along with interest and for imposing penalties. After due process of law, the Original Authority confirmed the demand of Rs. 98,57,126/- for the period from 01.05.2006 to 30.04.2007, but, however, dropped the demand for the period from 01.10.2004 to 30.04.2006 and 01.05.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anks and uses these funds to grant loans to their members. The loans are for small amounts to help the eligible women members to enable them to find a livelihood like rearing cattle, setting up petty shops, handicrafts, etc. The loans are sanctioned in periodical meetings of the members as decided between the members and the loans are not sanctioned by the Trust as such. The obligation of repayment of the loan is also cast on the group and if any one member of the group defaults in repayment, the other members of the group are liable to repay the same and this ensures peer responsibility on the group to ensure repayment. Thus, the loans are not disbursed as in normal banking activities. Weekly meetings of the members are conducted to promot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble service stood as stated above. For a limited period from 01.05.2006 to 30.05.2007, the said taxable service as given in Section 65(105)(zm) was amended to include the words "any other person". The Commissioner has confirmed the demand for the period 01.05.2006 to 30.04.2007 alleging that the levy of service tax would be attracted for this period since the assessee would come within the ambit of "any other person" for this period. 2.3 He adverted to the Show Cause Notice and submitted that even though the demand has been confirmed for the period 01.05.2006 to 30.04.2007, by relying on the amendment brought in by adding the words "any other person", in the Show Cause Notice, the demand has been raised alleging that the appellant is a n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....other person". Thus, the appellants would fall within this category and, therefore, the Commissioner has rightly confirmed the demand for this period. 3.2 He supported the grounds of appeal stated in the appeal filed by the Department and argued that the appellants being a non-banking financial institution, are liable to pay service tax for the remaining part of the demand for the period 01.10.2004 to 30.04.2006 and also 01.05.2007 to 30.11.2009. 3.3 He also submitted that the Commissioner has erroneously set aside the penalties. 4. Heard both sides. 5.1 For better appreciation the amendment brought forth to the definition of "taxable service" under Section 65(105)(zm) of banking and financial service during the disputed period ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty and, therefore, their services are classifiable under bank and other financial services with effect from 10.09.2004. 5.3 The Ld. Counsel has brought to our notice the definition of "non-banking financial institution" as laid down in the RBI Act. Only a company, corporation or cooperative society would fall within the definition of non-banking financial institution. There is no allegation in the Show Cause Notice that assessee is liable to pay service tax as they are rendering 'Banking and Other Financial Services' as they are included in the category "any other person". In fact, the categorical allegation in para 8.4 and 8.5 of the Show Cause Notice is that assessee is a non-banking financial institution and therefore is liable to pay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellants cannot be termed as a "banking company" or "banking institution including a non-banking financial company" for the purposes of Section 65 (12) of the Finance Act, 1994. 6. From paras 6 to 9 of the SCN, we find that the proposal to demand service tax liability under Section 65 (12) ibid is only on the allegation that the appellants are a "financial institution". It is only this allegation that has been examined and taken forward by the adjudicating authority in the impugned order. For example, in para-25 of the order, the adjudicating authority concludes that "It is therefore evident that a non-banking financial institution like GVT is also covered within the ambit of "Financial Institution" as defined in Section 65 (12) rea....