TMI Blog2017 (2) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... Mathew, Member (Technical) Mr. Mehul Jiwani, C.A. for appellant Shri R. Kapoor, Commr (AR) for respondent ORDER Per M.V. Ravindran This appeal is directed against order-in-original No. 246-247/14-15/V/2011/COMMR/KS/ST dated 13.09.2011. 2. The relevant facts, after filtering out unnecessary details, are the appellant herein during 2002-03 to 2006-07 had provided Computer Colour Display Machines along with software for matching of shades to their dealers. The said machines are used by the dealers for preparing shades of paint of particular colour and the same are sold by the dealers to the customers. Appellant has been recovering rent for the machines provided by them and are paying sales tax. The case of the department in the two show-cause notices, that service tax liability arises on the amount received as rent and the department sought to classify the said services under the category of Banking Other Financial Services . Appellant contested the show-cause notices on merits as well as on limitation. Adjudicating authority did not agree with the contentions raised and confirmed the demand with interest and also imposed penalties. 3. Learned C.A. would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing company and manufacture paints; the paints are sold to the dealers; Computer Colour Display machines along with software are also provided to arrive at desired combination of shades required by consumers; CCD along with software are used by the dealers; the dealers are charged rent for such machine provided. It is the case of the Revenue that the amount received as rent is chargeable under Banking Other Financial Services . We have read the definition of Banking Other Financial Services provided under Section 65 (12) of the Finance Act, 1994 during the relevant period which reads as under:- Section 65 (12) (July 2004) (12) banking and other financial services means (a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate namely : (i) financial leasing services including equipment leasing and hire-purchase by a body corporate; (ii) credit card services; (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking; (v) asset management including portfolio management, all forms of fund management, pensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice, we find that the amount received by appellant in the case in hand would not be covered for taxing under Banking and other Financial Services . The Circular dated 04.07.2006 of the CBEC indicates as under:- 3. Banking and other financial services are defined under section 65(12). Such services provided to a customer by a banking company or a financial institution including a non-banking financial company or any oilier body corporate or any other person to a customer are liable to service tax under section 65(105)(zm). The expression any other person appearing in section 65(105)(zm) is to be read ejusdem generis with the preceding words. The expression other financial services appearing under section 65(12)(a)(ix) is a residuary entry and includes; those services which are normally rendered by banks or financial institutions. 4. Hence, banking and other financial services provided by a banking company or a financial institution or a non-banking financial company or any other service provider similar to a bank or a financial institution are liable to service tax under section 65(105)(zm) of the Finance Act, 1994. Department of Posts is not similar to a bank or a fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible goods to the fold of law. This is appearing in Section 65(105)(zzzzi) of Finance Act, 1994 which came into force w.e.f. 16-5-2008. Finding that there was no law to tax the transfer of right to use movables before 16-5-2008, even on such count also, the appellant is excluded from the purview of law. 6.4 In the case of Inox Air Products Ltd. (supra) there was a issue of charging service tax on an amount received as lease rent under Banking and other Financial Services for lease of storage tanks to customers. The Tribunal held as under:- 8. Further, we find that the Board by the circular relied upon by the appellants, clarified in respect of the activity covered under banking and financial services. As the appellants are not a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern in relation to banking and other financial services, therefore, we find merit in the contention of the appellants in this regard. Further, we find that the Tribunal in the case of G.E. India, Industries Ltd. (supra) in a similar situation where extrusion material was given on lease to Jain Irrigation, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment schedule contains the details of the EMIs with the break-up for the principal and the interest. In respect of leasing and hire purchase, the amount recovered as principal is not the consideration for services rendered but is credit to the capital account of the lessor/hire purchase service provider. The interest/finance charges is the Revenue or income and is credited to the Revenue account. Such interest or finance charges together with the lease management fee/processing fee/documentation charges is the consideration for the service rendered and therefore, they constitute the value of taxable service and Service Tax is payable on this value. Accordingly, it is clarified that Service Tax in the case of financial leasing including equipment leasing and hire purchase will be leviable only on the lease management fee/processing fee/documenta-tion charges (recovered at the time of entering into the agreement) and on the finance/interest charges (recovered in equated monthly installments) and not on the principal amount. 6.5 It can be seen from the above reproduced ratio of various decisions of the Tribunal similar issue has been decided in favour of the appellant herein. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
