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2019 (3) TMI 976 - AT - Service TaxReversal of proportionate credit - Exempt service or not? - lending of loans - Whether the Appellants are required to reverse proportionate Cenvat credit and as to whether interest etc. earned by them from cash credit, overdraft, etc. would be treated as exempted service? - Held that:- As per sub- section 4 of section 67 of Finance Act 1994, the value of taxable services has to be determined in terms of Service Tax (Determination of Value) Rules, 2006. As per Rule 6 (2) (iv) the interest on loans has to be excluded from the taxable value - In case of HDFC [2018 (9) TMI 312 - CESTAT MUMBAI] the Tribunal Mumbai has gone further ahead and have put to rest the argument that only interest part is exempted and not the other administrative charges and fees etc. are not exempted and thereby the service would not come under the purview of exempted services - the Banks are free to decide the interest after taking into consideration administrative expenses if any - there is no merit in the Appellants argument that interest is to be deducted only for the purpose of calculating the taxable value - the lending of loans on interest as an exempted service. Thus, the services rendered by the Appellants in advancing loans etc. are exempt. Therefore, the amount of interest earned in advancing of loans needs to be taken into consideration while determining the amount to be reversed in term of Rule 6(3A)(c) of the CENVAT Credit Rules, 2004. Levy of service tax - alleged supply of manpower to their subsidiary - Held that:- As long as it is not proved that the Appellants have received anything other than the reimbursement of wages, no Service Tax can be levied - demand do not sustain. Cenvat Credit - credit availed on input services availed by them in respect of their branches in J & K - Held that:- The Learned Commissioner has not accepted the claim of reversal made by the Appellants only on the ground that the reversal is not made on annual basis and that the Chartered Accountant has not certified the amounts reversed. We find that this argument is not acceptable. In case the reversal was not within time it was free for the Learned Commissioner to charge interest applicable thereof - it is a fit case to remand this matter to the Commissioner for examining the issue once again. Levy of service tax - Directors’ sitting fees - Held that:- The reimbursed expenses are not to be included in the value of the taxable services - this issue also needs to go back to the adjudicating authority for a proper appreciation of the facts of the case and to give allowance in respect of reimbursed expenses to the Appellants. Time limitation - suppression of facts or not? - Held that:- We are not inclined to give a carpet ruling that since the Appellants are public sector undertaking suppression of facts cannot be alleged. The issue depends on case to case basis. Therefore we find that this issue also needs to be looked into again by the adjudicating authority. Penalty - Held that:- Looking into the fact that the Appellants are public sector undertaking and that most of the issues involved were interpretative in nature we find that imposition of 100% penalty is certainly not warranted. The amounts being paid before the issue of Show Cause Notice itself, penalties can be restricted to 25%. Appeal allowed in part and part matter on remand.
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