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TMI Blog2017 (11) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Rajagopal, Special Counsel Shri A. Cletus, ADC (AR) ORDER These eight appeals are on the common disputed issue and are accordingly taken-up together. Seven appeals are by appellant-assessee and one by Revenue. The appellant-assessee is engaged in finance operations as a Non Banking Financial Company [In Short, "NBFC"]. They are registered with the department for payment of service tax under various categories of taxable services. During the verification of accounts maintained by appellant-assessee, the officers noted that certain part of income shown under the heading "Fleet Card Income" from their customers, is not included in the taxable income by the appellant. The Fleet Card issued by the appellant to the customer, who avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the tax dispute was imposed. The seven appeals by appellant-assessee are against such findings. In respect of appeal by the Revenue, though the original authority confirmed the tax liability on such charges, the Commissioner (Appeals) vide order dated 27.01.2012 set aside the said order and allowed the appeal by the appellant-assessee. Aggrieved, the Revenue is in appeal. 2. The learned counsel for the appellant-assesee submitted that the "additional finance charge" is nothing but interest. Circular, dated 17.09.2004 of the Board clearly specifies that Interest on Loans is excluded for payment of service tax. Notification No. 12/2006-ST, dated 19.04.2006 stipulates that Interest on Loans is not to be included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for Revenue Shri N. Rajagopal submitted that the "finance charge" and "additional finance charge" cannot be considered as interest, as they are not dealing with any loan transaction by the appellant to the customer. He referred to the arrangement, appellant had with oil companies to emphasis that the customer with card gets a host of facilities and the transaction of utilsing such credit for procuring fuel and settling the amount in terms of the agreement cannot be considered as a loan transaction. There is no pre-determined amount, though there may be ceiling for utilisation of the card. In a typical loan arrangement, the amount is known beforehand and the period of return along with terms of interest is also known. It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's own website as well oil company's web site, the original authority elaborately listed his reasons that "Fleet Cards" operates similar to credit card. We have also perused the agreement entered into by the appellant-assessee with the oil company. The appellant-assessee has to make payment of the bill to the oil companies within three working days of such utilization data reaching them in electronic format. Fortnightly, bills are raised, Fleet Card-wise on the card holder with the amounts spent by way of "Fleet Card", which are later on paid by the customers or cardholders. This arrangement, the original authority concluded, cannot be treated as repayment of loan but only a payment against credit card utilisation. We are in agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder may select either "FCP or "no FCP" option. If the card holder selects "no FCP" option, "finance charge" as per the policy of the appellant-assessee shall be charged from the card holder for the actual days of utilisation of credit. In case, the card holder has selected "FCP" option, the appellant-assessee shall offer the FCP option for a period determined by the appellant-assessee and oil company. In such cases, the oil company shall pay the appellantassessee, an amount as determined in the agreement itself. 9. On a careful consideration of the arrangement made by the appellant-assessee with the oil companies and the Fleet Card Customer, we are of the considered view that the "finance charge" and "additional finance charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The impugned order did not bring out sustainable reasons for invoking willful suppression, mis-statement etc., against the appellant-assessee. Accordingly, we hold that while the appellant-assessee is liable to service tax on the income shown as "finance charges" and "additional finance charge", the demands are confirmed for normal period. On the same reasoning, the penalty imposed under section 78 is also not sustainable.
12. In view of our above discussion and analysis, we dismiss the appeals filed by the appellant-assessee except to the extent of setting aside the demand for extended period and penalty under section 78.
The appeal by Revenue is allowed.
(Pronounced in open court on 14/09/2017) X X X X Extracts X X X X X X X X Extracts X X X X
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