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2022 (2) TMI 408 - CESTAT BANGALORELevy of service tax - incidental charges - token charges and postage charges recovered - charges recovered for disbursement of money - Revenue alleged that part of the interest collected by the appellants, over and above 18% of interest, at times referred to as incidental charges are leviable to service tax - extended period of limitation - penalties. Whether the Interest charged from the customers above 18% per annum initially recorded in internal records under the head ‘Incidental Charges’ till September 2008 and as ‘Risk Interest’ from October 2008 and from 2013-14 the entire amount of interest as ‘Interest on Gold Loan’ is liable to Service Tax? - HELD THAT:- It is not disputed that the appellants are a NBFC and are engaged in collection of deposits and advancing of loans against security inter alia in the form of gold. The appellants charge interest on the loans advanced. It is the case of the department that prior to October 2008, appellants have collected some incidental charges which is taxable to service tax and for the period after October 2008, the appellants have collected risk interest / interest on gold loan over and above the prescribed rate of 18% as per RBI. For the period prior to October 2008, it is the contention of the appellant that in view of the restrictions, imposed by the Kerala Government, that no money lender will charge interest over and above 2% than the interest charged by commercial banks, they have shown a portion of the interest as incidental charges. However, after October 2008, the same is referred to and accounted as risk interest / interest on gold loans. As long as the consideration received for advancement of loans is interest in whatever manner it is accounted for and at whatever rate it is collected, the same is not chargeable to service tax. Also the learned Commissioner vide order dated 6.7.2018 (Revenue appeal No.ST/21862/2018) has rightly concluded that the demand of service tax on interest of gold loans is not sustainable. The demand on account of interest is set aside irrespective of their nomenclature i.e., incidental charges/risk interest/interest on gold loan. Whether Token Charges and Postage Charges collected as reimbursement of expenses incurred from the customers are an additional consideration for the loans and advances under the “Banking and other Financial Services” attracting levy of service tax? - HELD THAT:- Having gone through the order, it is found that the learned Commissioner seeks to distinguish between the recoverable expenses discussed in the above case and the case of the appellant. It would be naïve to come to such a conclusion only because the reimbursable expenses discussed in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] relate to travel cost, hotel stay, transportation, etc., and in the instant case, it is about token charges, postal charges, etc. The distinguishing is only on the categories of expenses and not on the principle of exclusion of reimbursable expenses and thus, not acceptable. It is also found that there have been number of judgments on the excludability of reimbursable expenses. Therefore, the demand on the token charges, postal charges, etc., would not sustain and the same needs to be set aside. Demand of service tax - money transfer service - HELD THAT:- In the light of the principles of taxation, all the players at one end cannot be treated as exporters and all the players at the other end cannot be treated as importers. If the appellants are rendering service to an Indian entity who is in turn engaged in export of services, law requires that the appellant pay service tax and their client is eligible to avail credit of the same and refund if applicable. There is no short-cut of the procedures. Since because the ultimate beneficiary is abroad, it cannot be claimed that the appellants are exporting services. Neither the place of rendering of the activity nor the type of service rendered by the appellants nor the recipient of such service are stationed abroad. Therefore, we are not inclined to consider such service as an export of service - the demand of service tax on the money transfer service rendered by the appellants requires to be upheld. Liability of service tax - air travel agent / rail travel agent / travel agent services - commission on insurance - HELD THAT:- The Revenue pleads that no documentary evidence whatsoever has been given by the appellants to the adjudicating authority. The appellants, on the contrary, submit that they have placed relevant challans on record. The only way to resolve the issue is to send it back for the purpose of verification. Therefore, the case remanded to the adjudicating authority for the limited purpose of verifying the claim of the appellant that they have discharged the liability of service tax in respect of air travel agent / rail travel agent / travel agent services and in respect of commission on insurance. Appeal allowed in part and part matter on remand.
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