TaxTMI 
TaxTMI 
2008 (7) TMI 227
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....set aside the same. The case of the petitioners is that they are doing business in chit funds, the transactions of which are clearly covered by the provisions of the AP Chit Funds Act, 1971 and the rules made thereunder. According to them, the very nature of transaction stands quite apart. In support, the petitioners referred to various provisions of the said Act. 3. Under Chapter V of the Finance Act, 1994, the first respondent for the first time, imposed the levy of service-tax on rendition of service by the provider of service to the receiver. Clause (12) of section 65 of the said Act, defines "banking and other financial services" and sub-clause (v) thereof refers to "asset management". It is stated that it does not include the cash management. It is pointed out that the second respondent herein as per circular dated 15-3-2002 stated that the RBI advised that the business of chit funds is to mobilise cash from the subscribers and therefore falls under cash management. Under the Finance Act, 2007, which came into effect from 1-6-2007, the sub-clause (v) of section 65(12) of the Finance Act, 1994 was amended with the deletion of the expression "it does not include cash managem....
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....h management" attracts the levy of service tax on chit fund transactions. It is also pointed out that the RBI clarified in this regard and it is only on the guidelines and advise of the Reserve Bank, the impugned circulars have been issued and therefore there is absolutely no illegality in the entire action of the respondents. Further it is pointed out that the petitioners have an alternative remedy of appeal and adjudication at various stages to raise these objections and without availing the same, the invocation of extraordinary jurisdiction of this Court under Article 226 of the Constitution of India is wholly unsustainable, hence these writ petitions are liable to be dismissed. 5. Sri N. Venkataramana learned senior counsel appearing on behalf of the petitioner, mainly contended that merely because of deletion of certain expressions under the aforesaid clause (12) of section 65 of the Finance Act, 2007, the nature of business done by the petitioner cannot be roped in, as long as the levy is not made specifically in respect of such transactions in clear words. Therefore, even otherwise it has been contented that in view of the nature of chit transaction as already been explai....
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....r by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as B determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount." 10. The nature of chit transaction has come up for consideration before the Apex Court in Shriram Chits & Investment (P.) Ltd. v. Union of India AIR 1993 SC 2063, wherein, it has been held as under: "The provision in section 6 relating to entering into chit agreement clearly shows that a contract has to be entered into between the subscribers and the foreman and in view of the definitions provided in section 2(b), 2(c), 2(d), 2(e) and 2(j) enforceable contract comes into existence and the Act provides how the contract has to be implemented and acted upon by the parties to the contract. Therefore, it is a special form of contract contemplated by Entry 7 of List III of the Seventh Schedule of the Constitution of India a....
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....vice, advice on mergers and acquisitions and advice on corporate restructuring and strategy; and (vii) provision and transfer of information and data processing; (b) foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a);" 12. It has been the argument of the respondents that since the nature of chit transactions falls within the expression of "cash management" and sub-clause (v) of the above provision excludes the same, there was no levy of service tax on the said transactions. The aforesaid provision had undergone a change by way of an amendment under the Finance Act, 2007, with effect from 1-6-2007 in sub-clause (v), by which, the expression "but does not include cash management" was omitted. Therefore, it is the case of the respondents that chit transaction and business of the petitioners fall within the mischief of 'cash management", hence it attracts levy of service tax. Hence, the impugned circular dated 23-8-2007 seeks the petitioners to adhere to the format as contemplated therein. The petitioners objected to the said action on the part of the respondents herein by raising several objections in writing. In s....
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.... under the law or commercially. Admittedly, there is no provision whatsoever by including specifically chits within the meaning of either "cash management" or "asset management". Therefore, irrespective of such amendment either by earlier inclusion or later exclusion of those expressions it will not have bearing on the chit transaction. 15. The respondents placed reliance on the online dictionary meaning in support of their contention that the nature of chit transactions falls within the meaning of "cash management", which is as under: - "http:/ /ardictionary.com/fund/6980 Fund Definition: an aggregation or deposit of resources from which supplies are or may be drawn for carrying on any work, or for maintaining existence. Fund 2 Definition : A stock or capital; a sum of money appropriated as the foundation of some commercial or other operation undertaken with a view to profit; that reserve by means of which expenses and credit are supported; as, the fund of a bank, commercial house manufacturing corporation, etc. http: / /www.yourdictionary.com/fund Fund definition Noun 1. a supply that be drawn upon; stock; store a fund of good humor. 2. (a) ....
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.... look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. [Per Rowlatt J. Cape Brandy Syndicate v. IRC [1921] 1 KB 64,71: [1920] 12 Tax Cases 358,366, approved in CIT v. Ajax Products Ltd. [1965] 55 ITR 741 (SC), CIT v. Shahzada Nand & Sons [1966] 60 ITR 392 (SC), Smt. Tarulata Shyam v. CIT 1977 CTR (SC) 275 : [1977] 108 ITR 345 (SC), Canadian Eagle Oil Co. Ltd. v. King 27 Tax Cases 205, 248 (HL), Mapp (Inspector of Taxes) v. Oram 45 Tax Cases 651, 682 (HL): [1970] 75 ITR 411, 424 (HL)]." 17. In Government of Andhra Pradesh v. Smt. P. Laxmi Devi [2008] 2 SCJ 723 the Apex Court held "it is well-settled that stamp duty is a tax, and hardship is not relevant in construing taxing statutes which are to be construed strictly. As often said, there is no equity in a tax vide CIT v. V. MR. P. Firm AIR 1965 SC 1216. If the words used in a taxing statute are clear, one cannot try to find out the intention and the object of the statute". Therefore in the absence of a specific statutory definition of "cash ....