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Service tax Co-operative Society for Banking services



Guest



Guest (Querist)
co-operative society(bank)is a body corporate and as per Sec. 2(7) of companies Act, a co-operative society is out of definition of body corporate and therefore, Is the co-operative society not exempted from service tax so far as banking services are concerned by exclusion through definition.


As per the definition u/s 65(105)(zm), the service provider should be:
1)banking company or
2)a financial institution including a non-banking financial company or
3)any other body corporate or
4)commercial concern.
Though co-operative banks are not included, they do charge service tax on the services. Anyone please clarify.

A co-operative society is not a body corporate but it could be covered under - other commercial concern. sec 65 (105)(zm) talks of services provided by a banking company.... or commercial concern in realtion to...


Guest



Guest (Querist)
Even a banking company,a financial institution including a non-banking financial company & body corporates are also commercial concerns. If law intents to tax all the commercial concerns and any other person (earlier), then what is the intention of the law behind listing all these banking company,a financial institution including a non-banking financial company & body corporates etc in the relevant sections?


Guest



Guest (Querist)
My query is still unresolved Sir,

"banking" shall have the meanings assigned to it in clauses (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949),
(11)

"banking company" shall have the meanings assigned to it in clauses (a) of section 45 A of the Reserve Bank of India Act, 1934 (2 of 1934)

banking and other financial services” means
(a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or [commercial concern]*, namely :—
(i) financial leasing services including equipment leasing and hire-purchase;
[‘Explanation.—For the purposes of this item, “financial leasing” means a lease transaction where—
(i)

contract for lease is entered into between two parties for leasing of a specific asset;
(ii) such contract is for use and occupation of the asset by the lessee;
(iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and
(iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment;’;]
(ii) Omitted
(iii) merchant banking services;
(iv) securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing
[Substituted vide Finance Bill 2008 w.e.f. 16th May, 2008]
(v)

asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, [x x x]1
(vi) advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy;
(vii) provision and transfer of information and data processing; and
(viii) banker to an issue services; and
(ix) other financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit and bill of exchange, transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults, operation of bank accounts;”;
(b)

foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub-clause (a);

‘Explanation.— For the purposes of this clause, it is hereby declared that “purchase or sale of foreign currency, including money changing” includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale, as the case may be, is specified separately;

[Substituted vide Finance Bill 2008 w.e.f. 16th May, 2008]



Co-operative society is covered under reserve bank definition, then it would cover under service tax irrespective of commercial or charitable or non profit making organization.


and the definition is inclusive and not exhaustive

A co-operative credit society does not belong to any of the entity specified in sec.65(105)(zm)or Rule 2(1)(d)and the service provide by it cannot be classified as "banking and Financial services" as per sec.65(12). It will not come under service tax net. Once the society becomes licensed by RBI the situation changes.Refer decision of Commissioner(Appeals) Pune in the case of jankalyan nagari credit society for details.


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