The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT) while ordering the re-quantification of the demand held that Services of online information and database access or retrieval (OIDAR), business auxiliary service or club and association service provided by National Securities Depository Ltd. (NSDL) is apt of “provision and transfer of information and data processing”, classifiable under (vii) of Banking and Financial Services as defined under Section 65(12) of Finance Act, 1994 are taxable.
Intelligence gathered by the officers of Directorate General Of Central Excise Mumbai Zonal Unit to effect that Appellants, NSDL was not discharging service tax on operational income received on account of transaction fees, custodial fees, etc, by wrongly claiming exemption from service tax as per Board Circular No.B.II/1/200/TRU dated 09.07.2001. These amounts received by the Appellants from Depository Participants appeared to be liable to taxation under the category of “Banking and Financial Services”.
The tribunal consisting of the Judicial Member S.K. Mohanty and Technical Member Sanjiv Srivastava while upholding the impugned order but remand the matter for re-quantification of the demand after allowing the benefit cum tax value as per section 67(2) of Finance Act, 1994 and amount of tax paid by the appellants as per the ST-3 returns for relevant period filed by the appellant.
Firstly, the tribunal found that the services provided by the appellant to depository participants are apt for “provision and transfer of information and data processing”, classifiable under (vii) of Banking and Financial Services as defined under Section 65(12) of Finance Act, 1994.
Secondly, the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994, for demanding the service tax is invocable.
Thirdly, the benefit of cum tax value as per sub-section (2) of Section
67 of Finance Act, 1994 is admissible to the appellants and so is also the benefit of the tax already paid as per the ST-3 returns filed by them, hence matter needs to be remanded back to adjudicating authority for re- quantification of demand.
Fourthly, the Demand of interest under Section 75 of the Finance Act, 1994 is justified.
Lastly, Penalties imposed under Section 75A, 77 & 78 of Finance Act, 1994 is justified but needs to be redetermined in light of the re-quantification of demand in de-novo proceedings.Subscribe Taxscan AdFree to view the Judgment