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2022 (9) TMI 1062 - AT - Service TaxLevy of service tax - banking and other financial services - premium on interest restructuring of loan as interest on loans - whether restructuring premium charged by respondent falls under lending or not? - suppression of facts or not - extended period of limitation - HELD THAT:- The respondent was to receive total interest of Rs. 10,800 in next 3 years at the original interest rate of 9% as agreed upon but due to lowering down the interest rate to 6%, respondent will now receive Rs. 07,200 at 6% rate of interest in next 3 years. Therefore, to compensate for the loss of interest that is going to be caused to the respondent for reduction in rate of interest due to interest restructuring, respondent computed net present value of such loss (which comes out to Rs. 03,269.88/-) and collected 50% of the same as premium for interest restructuring while remaining 50% is the benefit gained by the customer due to interest restructuring. The premium so charged by the respondent from its customers due to interest restructuring is nothing but net present value of loss of interest that will be caused to the respondent. It is not possible to accept the contention of the Department that restructuring premium charged by the respondent would fall under ‘lending’ and would be subjected to levy of service tax under ‘banking and other financial services’. Extended period of limitation - HELD THAT:- The extended period of limitation could not have been invoked in the facts and circumstances of the case. The respondent believed that the activities carried on by it was not taxable and the belief of the respondent stands justified by the order of the Commissioner dropping the charges. It also needs to be noted that the respondent had duly disclosed and recorded the information in its books of account. It cannot, therefore, be alleged that it had concealed or suppressed information with an intent to evade payment of service tax. The impugned order passed by the Commissioner, therefore, does not call for any interference in this appeal - appeal dismissed.
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