Case Law Details

Case Name : CCE Vs M/s Corporation Bank (CESTAT Bangalore)
Appeal Number : Appeal No. ST/115/2006
Date of Judgement/Order : 29/03/2011
Related Assessment Year :
Courts : All CESTAT (755) CESTAT Bangalore (101)

Hon’ble High Court has, in an identical issue in the case of Federal Bank Ltd., has upheld the view of this Bench inasmuch as upholding that the services of collection of telephone bills by the bank for BSNL, Airtel, etc. would not fall under the category of Business Auxiliary Service attracting liability of service tax under Section 65(19) of the Finance Act, 1994. It is held by the Hon’ble High Court that the services which are rendered by the current respondent would initially fall under ‘Cash management services’ under Section 65(12) which came into effect from 01/06/2007. In view of the binding judicial pronouncement by Hon’ble High Court of Kerala in an identical situation, we find no merit in the appeal filed by the Revenue. In view of the foregoing, the appeal is rejected.

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, BANGALORE
BENCH-DIVISION BENCH
COURT NO.I

Appeal No. ST/115/2006

Arising out of Order-in-Appeal No.47/2006-CE Dated: 14.2.2006
Passed by CCE(Appeals), Mangalore

Date of Decision: 29.3.2011

CCE, MANGALORE

Vs

M/s CORPORATION BANK

Appellant Rep by: Mr Harish, JDR
Respondent Rep by: Ms Lalitha, CA

CORAM: M V Ravindran, Member (J)
P Karthikeyan, Member (T)

FINAL ORDER NO. 301/2011

Per: M V Ravindran:

This appeal is filed by the Revenue against the Order-in-Appeal No.47/2006-CE dt. 14/2/2006.

2. Heard both sides and perused the records.

3. The issue involved in this case is regarding the service tax liability on the respondent for the period 7/2003 to 1/2005. The Revenue authorities were of the view that the services rendered by the respondent would fall under the category of “Business Auxiliary Service”. The respondent was collecting electricity bills and telephone bills on behalf of the electricity board and telecom companies. Show-cause notice was issued demanding the service tax along with interest and penal provisions. Adjudicating authority confirmed the demand, imposed penalties and also demanded interest. Aggrieved by such an order, assessee preferred and appeal before the ld. Commissioner(Appeals). The ld. Commissioner(Appeals) has upheld the contentions raised by the assessee before him and has allowed the appeal by recording as under:-

“The appellants have contended that they have not provided any service as such but allowed the deposit of such bills in account of their clients maintained by them which is part of normal banking activity and cannot be construed as business auxiliary service. The adjudicating authority has however concluded that these services are covered within the scope of business auxiliary service under the service of collection of cheque / cash from customers under sub-clause (iii) of the definition prior to 10/9/2004 and under sub-clause (vii) subsequently. This collection is a service rendered under business auxiliary service to M/s. BSNL / Electricity Board.

The argument that such collection is part of normal banking activity and it is not covered by the definition of business auxiliary service is not convincing in view of the appellants specific agreements with their clients where appellants have been specifically authorized to make these collection for a consideration.

I, however, find that prior to 10/09/2004 collection of cheques / bills etc. was not part of business auxiliary service and scope of customer care service cannot be stretched to cover such collection prior to this date under sub-clause (iii) of definition. Customer care service relates to post sale services rendered to the users / consumers by the service provider who provide this care on behalf of the client. No element of such customer care is present in the activity of collection of bills etc. Further, if collection of cheque / cash was part of earlier definition under sub-clause (iii) there would have been no need to spell them out under sub-clause (vii) by amending and enlarging the scope of business auxiliary service.”

4. Ld. DR would submit that the grounds of appeal very clearly differentiate the period prior to 10/9/2004 and post 10/9/2004. It is his submission that the services rendered by the respondent would fall under the category of customer care service provided on behalf of the clients. He would take us through the definition of the Business Auxiliary Service under Section 65 (19) of the Finance Act, 1994.

5. Ld. Counsel on the other hand would submit that identical issue was before this Bench in the case of Federal Bank Ltd. Vs. CCE, Cochin [(2009) 22 STT 361 (BANG.-CESTAT)]  wherein the Bench held in favor of the assessee. It is his submission that Revenue was aggrieved by such an order and took the matter in appeal to the Hon’ble High Court of Kerala in the case of CC,CE&ST Vs. Federal Bank Ltd. [(2010)24 STT (Ker.)] .

6. On careful consideration of the submissions made by both sides, we find that the Hon’ble High Court has, in an identical issue in the case of Federal Bank Ltd., has upheld the view of this Bench inasmuch as upholding that the services of collection of telephone bills by the bank for BSNL, Airtel, etc. would not fall under the category of Business Auxiliary Service attracting liability of service tax under Section 65(19) of the Finance Act, 1994. It is held by the Hon’ble High Court that the services which are rendered by the current respondent would initially fall under ‘Cash management services’ under Section 65(12) which came into effect from 01/06/2007. In view of the binding judicial pronouncement by Hon’ble High Court of Kerala in an identical situation, we find no merit in the appeal filed by the Revenue. In view of the foregoing, the appeal is rejected.

(Operative portion of this order pronounced on conclusion of the hearing)

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