TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 1249
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid by the appellant from / to their associate / subsidiary companies for providing corporate guarantee for a consideration would be exigible to service tax under the category of "Banking and Other Financial Services" (BOFS). In consequent, three show cause notices were issued to the appellants as under:- Date of the Show Cause Notice Period Involved Service Tax proposed by the department 22.4.2010 2004 - 05 to 2008 - 09 11,92,05,000/- (along with interest) 20.10.2010 2009 - 2010 1,75,82,100/- (along with interest) 19.9.2011 2010 - 2011 2,66,97,600/- (along with interest) 2. These show cause notices were adjudicated vide a common adjudication order dated 28.9.2012 (impugned order) wherein inter alia the amounts proposed in the show cause notices were confirmed with interest thereon and penalties were also imposed under sections 76, 77 and 78 of the Finance Act. Hence this appeal. 3. When the matter came up for hearing, ld. counsel Shri Vishal Agarwal and Shri Akshit Malhotra appeared and argued on behalf of the appellants. Ld. counsel explained that wherever the appellant was called upon to furnish Corporate Guarantee, they requested their holding company Viz.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder the scope of "any body corporate‟ is a corporate which is similar to a bank or financial institution. This clarification also brings out that the intention of the Legislature was only to tax services which are provided by a bank or a financial institution or an institution similar to a bank / financial institution. 3.4 The second argument advanced is that as per the definition of BOFS what is covered is issuing a Bank Guarantee and not issuing Corporate Guarantee. The expression "corporate guarantee‟ is not mentioned anywhere in the definition. Therefore, there can be no liability for issuing corporate guarantee since it is entirely different from Bank Guarantee. In the definition of BOFS under section 65(12) of Finance Act, the Legislature has used the expression "namely‟ and specified the services on which service tax was leviable under that category, thus restricting the scope of the said taxing entry to only all those specified services. It is settled law that the general expression which precedes the word "namely‟ is confined to the itemized expression that follows the word "namely‟. The ld. counsel relies upon the ratio of the following cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....od is unsustainable. 3.8 The issue in dispute is clearly one of interpretation and it cannot be concluded that there was willful suppression or fraud on the part of the appellant. Further, when the issue involved is an interpretational one, extended period of limitation cannot be invoked. 3.9 Moreover, time and again, departmental audits were conducted and in none of the audits the department could find any infirmity with non-payment of service tax on the alleged services of issuance of corporate guarantee. Hence invocation of extended period alleging suppression of facts is clearly illegal and unwarranted. 4. The ld. AR Shri A. Cletus supported the findings in the impugned order. He adverted to section 65(105)(zm) and argued that the taxable service of BOFS means any service provided or to be provided to any person by a banking company or a financial institution including a non-banking financial company or "any other body corporate‟ or commercial concern in relation to banking and other financial services. He submitted that after the amendment, the services of banking and other financial services rendered by "any body corporate‟ would be a taxable service. Such body....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that service tax will be applicable even to a body corporate. 4.5 He further relied on the decision of the Tribunal in the case of Eicher Motors Ltd. Vs. Commissioner of Central Excise, indore - 2016 (41) STR 721 (Tri. Del.) wherein it was inter alia held that with effect from 16.8.2002, the body corporate would also be liable to service tax for the activity of financial leasing under service tax category of BOFS. 5. Heard both sides. 6. The dispute that comes up for resolution is whether the commission received / paid by the appellant for providing / receiving corporate guarantees (CGs) to/from their associate / subsidiary companies would be exigible to service tax under the category of BOFS for the purpose of Finance Act, 1994. 6.1 For better understanding of the issue, it would be useful to reproduce the definition of BOFS as appearing in Section 65(12) of the Finance Act, 1994. "Banking and Other Financial Services" means - (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 [commercial concern]*, namely:- (i) financial leasing services including equipment leasing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n to banking and other financial services" 6.3 After analysis of the above definitions, the main take aways from the aforesaid definitions as applied to the facts of the appeal can be listed as under:- i. The inclusion of the word "other body corporate‟ came about with effect from 10.9.2004, itself i.e. right from inception. ii. The definition of BOFS under section 65(12) is a comprehensive definition and not an inclusive definition. iii. In Section 65(12)(a), the only persons who have been made liable to service tax under this category are banking company, financial institution (including a non-banking financial company) any other body corporate or a commercial concern. iv. Further, after listing out the category of persons who would be exigible to tax under the category, the services provided by such persons which alone would be exigible to such taxes have been comprehensively and specifically listed out with the use of the words "namely‟. 6.4 Analysis of the second limb of argument would be sufficient to resolve the issue whether the activity of issuing Corporate Guarantee is taxable under BOFS or not. There is no allegation that the appellant herein has pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e tax under that group. 6.5 The show cause notice dated 20.10.2010 has proposed the demand of service tax under BOFS on the premise that "any other body corporate that is providing bank guarantee for a consideration is liable to pay service tax from the date 10.9.2004". Para 7 of the same notice further alleges that "In the present case, the assessee stood guarantee to their associate / subsidiary companies for providing corporate guarantee for a consideration which is taxable. Further, the assessee paid corporate commission to a foreign company M/s. Vedanta Resources Plc. Inc. London in consideration of getting corporate guarantee to secure external commercial loans which is also taxable under reverse charge method". The same propositions are reiterated in the subsequent show cause notices dated 22.4.2010 and 19.9.2011. 6.6 From the facts on record, it is evident that the appellants did not provide "bank guarantee‟ to their associate companies in India, neither did they receive any "bank guarantee‟ from parent company abroad. What they provided / received was only a corporate guarantee to /from their associate companies for which exercise they had received / paid gua....