The Supreme Court has admitted a petition which has raised an important question: Is selling mutual fund products a taxable service?
The apex court headed by Justice S H Kapadia admitted an appeal filed by Commissioner of Service Tax stating that sale of mutual funds (MFs) amounted to service for the purpose of levy of service tax.
Earlier, the Court had sought reply from P N Vijay Financial Services Pvt Ltd, which was selling MF products for a commission, as to why it should be allowed to claim exemption on such services.
The service tax department had challenged the Customs, Excise and Service Tax Appellate Tribunal's judgment that dismissed its appeal, holding that the consultancy firm was not liable to pay any service tax.
The government alleged that exempting commissions on sale of goods under the heading BAS was not applicable to management consultants dealing in sale and purchase of MFs.
It said P N Vijay Financial Services, registered under the category management consultancy service with the tax authorities, had filed an application for refund of service tax under Section 11B of the Central Excise Act 1944, as made applicable to service tax by virtue of Section 83 of the Finance Act 1994.
The firm had filed refund claim for more than Rs 6.16 lakh on the ground that it had wrongly paid service tax on the commissions earned from sale and purchase of MFs from April 2003 to March 2004 as such services were covered under BAS as per the 1994 Act, the petition added.