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2014 (9) TMI 820 - AT - Service TaxLevy of service tax on bill discounting facility - collection of interest, against bill discounting facility - cenvat credit on common input services used in providing both taxable and exempted services - Whether service tax is payable on the value of interest received on bill discounting facility extended by the Appellant to its Customers - Whether the amount of CENVAT credit reversed being attributable to the input service used in or in relation to the provision of exempted service, under Rule 6(3A) of the CENVAT Credit Rules,2004, is correct or otherwise - Held that:- Analysing the meaning of ‘lending’, ‘loan’, ‘bill discounting’ , as cited above, and taking into consideration the arguments advanced by both sides, we are of the opinion that even though under the banker’s domain and practice, discounting of bills might be a form of advancing money to the customers and akin to some or most of the characteristics of a ‘loan’, but under the Finance Act, the service of ‘lending’ & ‘bill discounting’ have been considered as separate services, placed under the umbrella of taxable service of ‘banking and financial services’; accordingly, these service for the purpose of service tax should be treated differently. The interest received in providing the ‘bill discounting facility’ cannot be excluded in computing the value of taxable service treating it as ‘loan’ under Section 67 of the Finance Act, 1994 for the period prior to 18.04.2006 and under Rule 6(2) of the Service Tax (Determination of Value) Rules, 2006 Scope of Exemption Notification No.29/2004-ST dated 22.09.2004 - whether the exemption to the value equivalent to interest, is limited only in relation to the services of overdraft facility & cash credit facility and not applicable to discounting of bills; and the value equivalent to discounts only is exempted for rendering the service of bill discounting facility. - Held that:- it is the value of interest or discount, in connection with providing the services overdraft facility, cash credit facility, or bill discounting facility etc. would be exempted from service tax under Sec.66 of the Finance Act,1994. - it has been informed that no demand has been issued to other banks for rendering similar services. We also find that in the new negative list regime introduced w.e.f 01.07.2012, there is no scope for any ambiguity and call for interpretation as the position has been made clear in the respective provision 66D of the Finance Act,1994. The confirmation of demand on the value of interest received in rendering bill discounting facility and imposition of penalty by the Ld. Adjudicating authority, deserves to be set aside - Decided in favor of assessee. Reversal of cenvat credit - common input services - Held that:- A simple reading of the definition of ‘exempted service’ reveals that it also includes services that are exempt under Section 66 of the Finance Act, 1994. In the present case, interest on overdraft facility and cash credit facility are exempted from service tax under Section 66 of the Finance Act,1944 by virtue of Notification No.29/2004 ST dt.22.09.2004. Therefore, these services would definitely come under the scope of the definition of ‘exempted service’, hence, the argument that to attract Rule 6(3) of the CENVAT Credit Rules, 2004, the entire taxable service i.e. banking and financial services should be exempted and not few services mentioned under the categories of clause (ix) of the said Banking and Financial Services, is untenable. - Decided against the assessee. Extended period of limitation - Held that:- the Appellant be allowed a fair chance to present these evidences and be subjected scrutiny/verification by the department. Accordingly, we set aside the confirmation of demand of CENVAT Credit and imposition of penalty and remand the case for redetermination of the liability, if any, only on the issue of limitation - Decided partly in favour of assessee.
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