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2024 (2) TMI 618 - CESTAT KOLKATALevy of service tax - interest on hire purchase finance under “Banking and Other Financial Services” - interest on assignment of receivables under “Recovery Agent’s Service” - dealer discount under “Business Auxiliary Service” - scope of Hire Purchase Agreement and Hire Purchase Finance agreements - HELD THAT:- The Appellant enters into financing agreements with the customers wherein the customers purchase the assets in their name and approach the Appellant for the purpose of financing the same. the ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with the customers and there is no clause in the agreement providing the customers an option to purchase the product at the end of payment of all instalments. When a customer who is the owner of the goods enters into an agreement for financing the purchase of such goods, it is in effect a loan transaction and the lender is just given a license to seize the goods in case of breach/ default. In the present case, the ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with the customers and there is no clause in the agreement providing the customers an option to purchase the product at the end of payment of all installments. Therefore, by relying on the decision of the Hon’ble Supreme Court in SUNDARAM FINANCE LTD. VERSUS THE STATE OF KERALA AND ANOTHER [1965 (11) TMI 123 - SUPREME COURT] which has been relied upon in BAJAJ AUTO FINANCE LTD VERSUS COMMISSIONER OF C. EX., PUNE [2007 (5) TMI 28 - CESTAT,MUMBAI], it is held that the transaction between the Appellant and its customers is not hire purchase agreements and are merely hire purchase finance agreements which is not under the ambit of service tax as held in the case of Bajaj Finance. The demands of service tax along with interest and penalty confirmed in the impugned order is not sustainable - Appeal allowed.
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