The Bombay High Court upheld the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Order deleting Service Tax Levy on Fee Collected from Entities, thereby granting relief to The Securities and Exchange Board of India (SEBI), the respondent.
The appeal is filed under Section 35 (G) of the Central Excise Act, 1944 at the behest of the Principal Commissioner of the Commissionerate of Goods and Services Tax impugning the order passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT), West Zonal Bench, Mumbai allowing the Service Tax Appeal at the behest of the respondent herein.
With the insertion of Section 66 (3) in the Finance Act, 1994, when a Negative Tax Regime was introduced, the Commissioner of Tax-I at Mumbai issued a letter in terms of Section 14 of the Central Excise Act, 1994 alleging that the respondent was undertaking certain activities under the Securities and Exchange Board of India Act, 1992 (SEBI Act) in the course of which it was collecting fees from various entities under its control, and which appeared to the Commissioner to be taxable w.e.f. 1st July, 2012.
The respondent, denied its liability to levy of service tax mainly on the contention that the respondent was performing regulatory functions under SEBI Act.
The Department only stated that it appears from the correspondence referred to the respondent has wilfully suppressed facts from the Service Tax Department with an intention to evade payment of service tax. It does not specify any material particulars of how wilful misstatements or suppression of facts has been indulged in by the respondent or in what manner the acts of the respondent are wilful or with an aim to evade tax.
The Coram comprising Justices Dhiraj Singh Thakur and Valmiki Sa Menezes observed that “The CESTAT noticed that the issue of tax on the fees charged by the respondent was laid down in the correspondence with the Tax Administration as well as with various Government Authorities within a few months of the transition to the Negative List regime. “
“We are of the opinion that the finding of fact arrived at by the CESTAT to the effect that there was no suppression, misrepresentation or fraud committed by the respondent, to enable the appellant to invoke the extended limitation clause in Section 73 is proper and based upon the correct appreciation of the record” the Bench said.
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