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ST – Foreman commission is not liable to service tax under BOFS since 'cash management' as understood in common parlance would not embrace chit fund business: CESTAT

 

By TIOL News Service

BANGALORE, APRIL 14, 2018: THE appellants are engaged in business of chit funds. During the course of running the chit fund business, the foreman retains commission known as 'Foreman Commission'.

The Department viewed that such commission is liable to service tax under the category of 'Banking and Financial Service'. The dispute covers the period from 01.06.2007 to 30.06.2012.

As the demands were confirmed, the appellants are before the CESTAT.

The Bench observed that the dispute has been decided by the Apex Court in case of M/s Margadarshi Chit Funds Pvt. Ltd. 2017-TIOL-240-SC-ST wherein it is held that the chit fund business cannot be considered as ‘cash management' so as to be held as chargeable to service tax under the FA, 1994.

Following the settled law, the impugned orders were set aside and the appeals were allowed.

(See 2018-TIOL-1184-CESTAT-BANG)


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