Kerala High Court
All Kerala Association Of Chit Funds vs Union Of India on 19 October, 2012
Author: K.Vinod Chandran
Bench: K.Vinod Chandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
WEDNESDAY, THE 14TH DAY OF MARCH 2018 / 23RD PHALGUNA, 1939
WA.No. 273 of 2013
AGAINST THE JUDGMENT IN W.P.(C)NO. 32097/2007, DATED 19.10.2012
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APPELLANT(S)/IST PETITIONER AND A MEMBER OF THE 1ST PETITIONER :
1 ALL KERALA ASSOCIATION OF CHIT FUNDS
(STATE UNIT OF THE ALL INDIA ASSOCIATION OF CHIT FUNDS,
NEW DELHI), HAVING IT'S OFFICE AT ROOM NO.1, 2ND FLOOR, KALOOR
TOWER, KALOOR, COCHIN, REPRESENTED BY ITS PRESENT GENERAL
SECRETARY K.P.GEE VARGHESE BABU.
2 ST. GEORGE CHITTIES (KARAKKATT)PRIVATE LIMITED,
KANINADU, PUTHENCRUZ, ERNAKULAM DISTRICT,PIN- 682 310,
REPRESENTED BY ITS MANAGING DIRECTOR, K.P.GEEVARGHESE BABU.
BY ADV.SRI.K.S.BHARATHAN
RESPONDENT(S)/RESPONDENTS/2ND PETITIONER :
1. UNION OF INDIA,
REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT
OF THE REVENUE MINISTRY OF FINANCE, SOUTH BLOCK, NEW DELHI.
2. CENTRAL BOARD OF EXCISE AND CUSTOMS,
DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, SOUTH BLOCK,
NEW DELHI.
3. DIRECTOR GENERAL OF SERVICE TAX,
9TH FLOOR, PIRAMAL CHAMBERS, JIJIBHOY LANE, LALBAG, PAREL,
MUMBAI 400 012.
4. CHIEF COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS,
(KERALA ZONE), C.R BUILDING, I.S PRESS ROAD, COCHIN.
5. RESERVE BANK OF INDIA,
REPRESENTED BY THE ASSISTANT GENERAL MANAGER,
DEPARTMENT OF NON-BANKING SUPERVISION, CENTRAL OFFICE, 2ND FLOOR,
WORLD TRADE CENTRE, CUFFE PARADE, COLOBA, MUMBAI 400 005.
6. TAX RESEARCH UNIT,
DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, SOUTH BLOCK,
NEW DELHI, REPRESENTED BY ITS UNDER SECRETARY.
..2/-
..2..
WA.No. 273 of 2013
7. NAIPUNYA CHITS PRIVATE LIMITED,
AMBUJA ARCADE, CANAL ROAD, NORTH PARAVUR, REPRESENTED
BY ITS MANAGING DIRECTOR, A.C.DINARAJ
R1 TO R4 & R6 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL
ADV.SRI.THOMAS MATHEW NELLIMOOTTIL, S.C
ADV. SRI.P.R.SREJITH, S.C
R5 BY ADV.SRI.JACOB VARGHESE
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 14-03-2018,
ALONG WITH W.A.NO.277 OF 2013 AND CONNECTED CASES, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
Msd.
19.03.2018
WA.No. 273 of 2013
APPENDIX
PETITIONER(S)' ANNEXURES :
ANNEXURE I: TRUE COPY OF LETTER DATED 07.12.2001 FROM 6TH RESPONDENT
TO THE 5TH RESPONDENT.
ANNEXURE II: TRUE COPY OF OPINION DATED 24.12.2001 GIVEN BY DEPARTMENT
OF NON-BANKING SUPERVISION, CENTRAL OFFICE, POLICY DIVISION
OF 5TH RESPONDENT.
ANNEXURE III: TRUE COPY OF OPINION DATED 21.01.2002 GIVEN BY MANAGER
OF DEPARTMENT OF BANKING OPERATIONS AND DEVELOPMENT,
CENTRAL OFFICE (BANKING POLICY SECTION) OF
THE 5TH RESPONDENT.
ANNEXURE IV: TRUE COPY OF LETTER DATED 05.02.2002 FROM THE ASSISTANT
GENERAL MANAGER, DEPARTMENT OF NON-BANKING SUPERVISION
(POLICY DIVISION) OF THE 5TH RESPONDENT TO
THE 6TH RESPONDENT.
ANNEXURE V: TRUE COPY OF REFERENCE DATED NIL FROM THE MINISTRY OF
FINANCE TO THE DEPARTMENT OF NON-BANKING SUPERVISION
OF THE 5TH RESPONDENT.
ANNEXURE VI: TRUE COPY OF CLARIFICATION DATED NIL ISSUED TO
THE 5TH RESPONDENT BY 6TH RESPONDENT.
RESPONDENT(S)' ANNEXURES :
NIL
//TRUE COPY//
P.S.TO JUDGE
Msd.
19.03.2018
K.VINOD CHANDRAN & ASHOK MENON, JJ.
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W.A.Nos.273, 277, 331, 785, 878, 1357, 1358, 1359 of 2013,
474, 641, 815, 968, 1521 of 2014, 281/2018
W.P.(C) Nos. 8774, 21909, 26203 of 2014,
10983, 11008, 11018, 12972, 13686, 20071, 22291 of 2015
18700/2016, 6641/2017, 13280/2017
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Dated this the 14th day of March, 2018
JUDGMENT
Vinod Chandran, J.
The issue raised in all these Appeals/Writ Petitions are with respect to the liability of chit transactions, to service tax as arising from the Finance Act, 1994. The issue arises during three periods, in so far as the amendments made to the Finance Act, 1994. They are, pre-2012, between 2012 to 2015 as also post-2015. According to the various establishments carrying on chits, who are the appellants in the maximum number of appeals/petitions in the batch, contend that the issue is squarely covered by AIR 2017 SC 3730, Union of India v. Margadarshi Chit Funds (P) Ltd . The learned Standing Counsel appearing for the Revenue submits that there is ambiguity in so far as the coverage between 2012 and 2015. An appeal is also filed by the Commissioner of Central Excise, Service Tax & Customs, numbered as W.A.No.281/2018. WA.273/2013 & connected cases 2
2. As to the history of the litigation, when chit fund business were sought to be levied with service tax, a batch of Writ Petitions were filed before the Andhra Pradesh High Court in which it was held that the chit fund business would not be covered under the Finance Act, 1994. Special Leave Petitions were filed before the Honourable Supreme Court, which was converted into Civil Appeals. While they were pending, a batch of Writ Petitions were filed before this Court, in which a learned Single Judge differed from the findings of the Andhra Pradesh High Court and held in favour of the Revenue by decision reported in 2013 (29) STR 557 (Ker.): 2012 (4) KHC 756, All Kerala Association of Chit Funds v. Union of India . Appeals were filed by the writ petitioners and the writ petitions pending and then filed, were posted along with the appeals. Pending these appeals, the Civil Appeals from the decision of the Andhra Pradesh High Court were considered and the liability negatived by the Honourable Supreme Court in AIR 2017 SC 3730. The decision of the Kerala High Court was specifically overruled. Later, some writ petitions filed were allowed, following the decision of the Honourable Supreme Court. One such judgment is challenged by the Revenue contending that the Apex WA.273/2013 & connected cases 3 Court has not considered the amendment of 2012. In such circumstances, the Writ Appeals/Writ Petitions have to be adjudicated based on the finding of the Honourable Supreme Court.
3. The issue briefly stated is, prior to 2007, there was definition of various 'Services' exigible to tax under Finance Act, 1994. Section 65(12)(v) defined b