No Service Tax on ‘Services in Relation to Chit-Funds’: Revisiting Delhi High Court Decision in ‘Delhi Chit Fund Association’

Excise and Customs Reporter, Vol. 198, pp. 1SF-16SF, July 2013

16 Pages Posted: 24 Jul 2013  

Tarun Jain

Supreme Court of India; London School of Economics & Political Science (LSE); National Law University Jodhpur (NLUJ)

Date Written: July 1, 2013

Abstract

In a recent decision and the first of its kind in the context of levy of service tax under the ‘negative list regime’, the Delhi High Court in ‘Delhi Chit Fund Association v. Union of India’ has declared as invalid the levy of service tax on ‘services in relation to chit-fund’. While such declaration of a levy as invalid is not unprecedented, the reasoning employed in the decision to conclude such invites a closer scrutiny in as much as the decision effectively restates the otherwise clear statutory provision. The decision also does not dwell in detail upon the defense put for by the tax-administration in support of their stand, in particular the principle of ‘ex abundanti cautela’, which in the view of this author provides a firm answer to the conundrum sought to be addressed by the decision. In the light of this and other factors this article makes a critical analysis of this recent decision.

Keywords: Service Tax, India, Chit Funds, Legal Interpretation, Fiscal statutes, Ex abundanti cautela

JEL Classification: H21, H25, K34, K49

Suggested Citation

Jain, Tarun, No Service Tax on ‘Services in Relation to Chit-Funds’: Revisiting Delhi High Court Decision in ‘Delhi Chit Fund Association’ (July 1, 2013). Excise and Customs Reporter, Vol. 198, pp. 1SF-16SF, July 2013. Available at SSRN: https://ssrn.com/abstract=2292044

Tarun Jain (Contact Author)

Supreme Court of India ( email )

New Delhi
India

London School of Economics & Political Science (LSE)

London
United Kingdom

National Law University Jodhpur (NLUJ)

Jodhpur
India

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