UNION OF INDIA vs M/S MARGADARSHI CHIT FUNDS(P)LTD.ETC.

The Supreme Court upheld the High Court's decision to quash Circular No. 96/7/2007-ST and Proceedings No. HAST 141/2007, asserting that the chit fund business does not constitute a service under the definition of 'banking and other financial services' as per sub-section 12 of Section 65 of the Finance Act, 1994. The Court clarified that service tax is not leviable on chit funds, as they do not fall within the ambit of taxable services defined in the relevant provisions. The ruling emphasized the need to interpret statutory definitions in light of the specific nature of the services provided by the assessees, governed by the Chit Fund Act, 1982.