2018 (8) TMI 702

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....n account of a customer which remained inoperative or dormant. It appeared to the department that such charges would be required to be part of the gross amount of value of taxable service for purposes of discharging service tax liability. Hence show cause notice dt. 27.5.2008 was issued to appellants, inter alia proposing demand of service tx of Rs. 17,39,970/- on such dormant period charges collected for the period 10.09.2004 to 31.03.2007, with interest thereon, and imposition of penalty under various provisions of law. In adjudication, the original authority vide an order dt. 11.03.2009 confirmed this proposed demand and also imposed penalties under Section 76, 77 & 78 of the Finance Act, 1994. In appeal, the Commissioner (Appeals) vide ....

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....vered under the Excise Audit, 2000 every year and all documents and books of accounts have been scrutinized by the Audit party of the Excise & Service Tax Department, Trichy. So, appellant has not concealed/suppressed any facts before the Department and the extended period of Limitation cannot be invoked u/s.73 (1) of the Finance Act, 1994. vi) Ld. counsel relies upon Board's Circular No.96/7/2007-ST dt. 23.08.2007 wherein it has been clarified that an amount collected for delayed payment of a telephone bill is not to be treated as consideration charged for provision of telecom service and, therefore, does not form part of the value of taxable service under section 67 read with Service Tax (Determination of Value) Rules, 2006. ....

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....nting operating cost and servicing such in operation bank accounts. iii) As per Section 65 (105) (zm) of the Finance Act, 1994, taxable service means any services including provided or to be provided to a customer by a Banking Company etc. in relation to Banking and Other Financial Services. iv) Ld. AR also refers to earlier decision of CESTAT Chennai in appellant's own case vide Final Order No.40871/2017 dt. 02.06.2017. 4. Heard both sides and have gone through the facts on record. 5.1 No doubt, banks provide a multitude of services. In fact the concept of banking is essentially on profits made in leveraging charges made for such services. At the micro level, there is a customer base of account holders where the lar....

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....e course of levying such charges. The customer in any case was not operating his account for quite some time, only for which reason the account has been declared dormant or inoperative by the bank. By levying "dormant account charges' such account holders are not getting any additional services or benefits that they were not getting earlier. This being so, levy of such charges are nothing but a penalty imposed on such account holders for keeping their account inoperative. Banks need a constant rolling of money and deposits, and inoperative or dormant account will not help this purpose. The dormant account charges are therefore nothing but a charge in the nature of penalty. 5.2 In this regard, we find that the Ld. Advocate's reliance on B....