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2018 (9) TMI 312 - AT - Service TaxCENVAT Credit - reversal of proportionate credit - Banking and other Financial Services - input service - Cash Credit/ Over Draft (CC/OD) services - whether the said service is exempt or not? - demand of Interest - time limitation - penalty - Doctrine of pith and substance. Held that:- It is quite evident that the actual consideration for the CC/OD services is only higher interest rate and nothing else - Since the entire consideration received against the CC/OD services is in nature of interest, the said services provided by them to their customer are exempt from payment of service tax under Notification No 29/2004-ST dated 22nd September 2004 - Since in respect of these services the entire consideration received from the customer is exempt from payment of service tax these services would definitely be covered by the definition of exempt service as provided by this rule. Doctrine of pith and substance - Held that:- Applying the same doctrine for ascertain the true nature of exemption provided by the said notification, the interest is not only the major component but is the only component for providing the said CC/OD services. What so ever minor amounts appellants may have charged towards the administrative fees etc., will not in fact change the nature of exemption provided to the said services - by exempting the value equivalent to interest recovered for providing these services, in fact, in pith and substance exemption has been granted to the services of CC/OD provided by Banking and Financial Companies. Since, the CC/OD services provided by the appellant are exempt from payment of service tax to the extent of interest recovered, the view of Commissioner in including the quantum of interest recovered against the provision of said services for determination of the amount to be reversed in term of Rule 6(3A)(c) of the CENVAT Credit Rules, 2004 cannot be faulted with. Time Limitation - Held that:- It is difficult at this stage, to ascertain whether all the facts in relation to these services and all facts including availment of CENVAT credit and its reversal as per rule 6(3A)(c) of the CENVAT Credit Rules, 2004 were disclosed is a question of fact which cannot be ascertained by us at this moment. Commissioner has also not recorded a specific finding in this regard in his order. In the interest of justice, therefore, the appellant be allowed a fair chance to present these evidences and be subjected to scrutiny/verification by the Department - matter remanded for re-determination of issue on limitation. Demand of Interest and penalty - Held that:- Since the matter have been remanded for re-determination of issue on limitation, there should be no hesitation in holding that interest under section 75 shall be recoverable on the amounts finally determined - Penalty also needs to be re-determined after determining the issue on limitation. Appeal allowed by way of remand.
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