GMR Hyderabad Air Cargo and Logistics Pvt Ltd Vs Commissioner of Central Tax Rangareddy (CESTAT Hyderabad)
CESTAT Hyderabad held that the activity of investment in mutual fund does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. Accordingly, it cannot be classified as exempted service and hence the very charge for applying Rule 6 of Cenvat Credit Rules could not be sustained.
Facts- The Department, in the course of audit, noticed that the appellant had availed irregular Cenvat Credit on exempted services and on certain inputs. Essentially, it was alleged that the appellants were engaged in purchase and sale of mutual fund units from Birla Sunlife Mutual Fund (BSMF) and that the said activity was treated by the department as trading of goods, inasmuch as mutual funds were covered within the definition of ‘securities’ and which in turn is included in the definition of ‘goods’. Therefore, the said transactions of sale and purchase of mutual fund units were considered as ‘trading of goods’, which was considered as exempted service. As a consequence, the appellants were required to comply with the provisions of Rule 6 of CCR. Thus, the department for the period October, 2013 to 2017-18 proposed to recover an amount of Rs.2,86,21,921/- in terms of Rule 6(3)(i) of CCR read with explanation under Rule 6(3D) of CCR, which was @ 6%/7% of the value of exempted service.
