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2015 (12) TMI 1356 - AT - Service TaxDemand of service tax - Banking and Other Financial Services - whether the hire purchase service rendered by the appellant prior to 16.08.2002 was covered under the scope of BOFS as defined under section (65) (10)/(12) - Held that:- as evident that to be covered under BOFS prior to 16.08.2002 the hire purchase service had to be rendered by such body corporate which was a banking company or a financial institution including a non-banking financial company. As per section 65 (11) ibid banking company has the meaning assigned to it in clause (a) of section 45 A of the Reserve Bank of India Act, 1934 - appellant does not qualify to be called non-banking financial company. So, it is established that the appellant is not a banking company nor a financial institution including a non-banking financial company and therefore the service rendered by it prior to 16.08.2002 was not covered under BOFS because prior to that date financial leasing services including equipment leasing and hire purchase by a body corporate were covered under BOFS only if such body corporate satisfied the requirement of being a banking company or a financial institution including a non-banking financial company. All the hire purchase agreements in respect of which the demand has been confirmed under BOFS were entered into prior to 16.08.2002 and that this assertion was made even before the primary adjudicating authority and has not been contested in the primary adjudication order. CBEC vide circular No.B11/1/2001-TRU, dated 09.07.2001 issued at the time of introduction of levy of service tax BOFS in para 2.1.4 clarified that the hire purchase agreements entered into prior to the imposition of levy i.e. 16.07.2001 will not be chargeable to service tax provided the goods are also delivered prior to 16.07.2001. - in respect of hire purchase agreements entered into by the appellant prior to 16.08.2002 where the vehicles were also delivered prior to 16.08.2002 were not liable to service tax under BOFS. Ld. advocate for the appellant fairly conceded that (i) while all the hire purchase agreements in respect of which the service tax demand of ₹ 39 lakhs has been confirmed were entered prior to 16.08.2002, but he could not confirm whether all the vehicles thereunder were also delivered prior to 16.08.2002 (ii) in respect of such hire purchase agreements where the vehicles were delivered on or after 16.08.2002 the service tax under BOFS would be leviable and for that purpose the case may have to be remanded to the primary adjudicating authority for verification and computation. - service tax is leviable under BOFS in those cases where even if the hire purchase agreements were entered into prior to 16.08.2002, the delivery of vehicles took place on or after 16.08.2002. In the ordinary course it may have been possible for an assessee to have bona fides belief about the non-leviability of service tax, the fact that the appellant did not provide the information in spite of being asked to do so several times evidently tantamount to suppression of facts which as per Section 73 ibid is sufficient for invocation of extended period. We however need not dwell on this issue in greater detail as the impugned demand has not been found to be sustainable except to the extent of such hire purchase agreements where the delivery of vehicle took place after 16.08.2002 which the appellant has also conceded and this demand is likely to be very small. Penalty under Section 78 ibid will get attracted but in the wake of the decision of Gujarat High Court in the case of Ratnamani Metals & Tubes - [2013 (12) TMI 1397 - GUJARAT HIGH COURT], the appellant will be eligible for reduced (25%) of the mandatory penalty as this option had not been expressly given to the appellant earlier. - Decided partly in favour of assessee.
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