TMI Blog2015 (2) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank due to lending of the fund, that is not brought within the purview of the Finance Act, 1994 for taxation in absence of any consolidated service charges included in such interest receipt and discernable. No evidence in this regard came to record. - Decided in favour of assessee. - ST/306/2008 - Final Order No. 40087 / 2015 - Dated:- 28-1-2015 - Shri D. N. Panda And Shri R. Periasami,JJ. For the Applicant : Shri N. Quadir Hoseyn, Adv. For the Respondent : Shri M. Rammohan Rao, AC (AR) ORDER Per: D.N. Panda Ld. Counsel submits that it is the interest income of the Bank that has been taxed in the present adjudication even though there were no service charges received in this regard. According to law if any taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/financial lease and not on loan for the reason that the services rendered are not just giving loan but services of hire purchase/financial leasing provided. He further says that during the period 14.05.2003 to 30.11.2007, interest received constitutes the gross value of taxable service provided and liable to service tax. Accordingly, he imposed service tax with the consequence under law to follow. 4. Adjudication order reveals that emphasis of the adjudicating Commissioner was to tax interest received by the appellant from hypothecation of vehicles/machineries and other equipments for the above period constituting the taxable value. 5. We are conscious that Finance Act, 1994 is not the law of Income Tax to tax interest income but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T for short) which in turn is a destination based consumption tax in the sense that it is levied on commercial activities and it is not a charge on the business but on the consumer. That, service tax is an economic concept based on the principle of equivalence in a sense that consumption of goods and consumption of services are similar as they both satisfy human needs. Today with the technological advancement there is a very thin line which divides a sale from service . That, applying the principle of equivalence, there is no difference between production or manufacture of saleable goods and production of marketable/saleable services in the form of an activity undertaken by the service provider for consideration, which correspondingly stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Service tax is, thus, a tax on activity whereas sales tax is a tax on sale of a thing or goods. [Emphasis supplied]. 7. In the above judgment Hon ble Court has also explained the nature of financial leasing service and taxability thereof in para 37 thereof as under: Applying the above decisions to the present case, on examination of the impugned legislation in its entirety, we are of the view that the impugned levy relates to or is with respect to the particular topic of banking and other financial service , which includes within it one of the several enumerated services, viz., financial leasing services. These include long time financing by banks and other financial institutions (including NBFCs). These are services rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006 Service Tax dated 1-3-2006). In other words, service tax is leviable only on 10% of the interest portion. (See also Circular F. No. B.11/1/2001-TRU dated 9.7.2001 in which it has been clarified that service tax, in the case of financial leasing including equipment leasing and hire-purchase, will be leviable only on the lease management fees/processing fees/ documentation charges recovered at the time of entering into the agreement and on the finance/interest charges recovered in equated monthly instalment and not on the principal amount). Merely because for valuation purposes inter alia finance/interest charges are taken into account and merely because service tax is imposed on financial services with reference to hiring /interest char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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