TMI Blog2019 (3) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs and maintenance, carried out and works contract etc. under reverse charge mechanism. (ii). on the manpower subject to METCO during the period 2008- 2012. (iii). on Telephone Bills, which are on the personal names of the Assessee employees which is not an input services for the period 2008-09 of 2012-13. (iv). on the directors sitting fees under business auxiliary service during the period 2009-13. D. The appellants took credit of Cenvat as well as State VAT during the period April 2012 to August 2013 and on input services provided to J K branches which falls under the exempted territory during the period 2008-09 to 2013-14. 2. The Show Cause Notice was adjudicated by Commissioner of Service Tax, Pune vide order in original PUN-SUTAX-000-COM-048-15- 16 dated 20.01.2016 and confirmed most of the demand raised therein and dropped a few. Moreover, the commissioner, vide a corrigendum on 02.02.2016, restricted the demand confirmed to a period of 5 years only and dropped demands beyond a period of 5 years. The Appellants are in appeal (ST/85914/2016) against such confirmation and Revenue is in appeal (No.ST/86028/16) against corrigendum issued by commissioner. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only deputed their employees to their subsidiary and got reimbursed the actual salary paid to them. In view of the following case law the demand is not maintainable. (i). Commissioner Vs Krohne Marshall Pvt. Ltd. 2016 (11) TMI 831 (SC) (ii). Arvind Mills Ltd. 2014 (4) TMI 132 (Guj) (iii). The Axis Bank Ltd. 2017 (1) TMI 607 (Mum) 3.4. Cenvat Credit availed on services rendered to J K branches: The Appellants submits that they have two branches in the state of J K; they reversed the proportionate by considering the income from these two branches. Reversal was made on 31.03.2011 from 01.04.2011, 50% on Cenvat credit has been reversed by the Appellants bank under Rule 6 (3B) of Cenvat Credit Rule 2004, which over writes the other rules relating to proportionate reversal. The Appellants submitted a CA certificate for the year 2009-2010 2010-2011. However the learned commissioner has confirmed the demand by holding that a CA certificate has not certified the amount reversed and the reversal was made only in the month of March post 01.04.2011 a confirmation of demand is not tenable. 3.5. Service Tax of directors sitting fees: The Appellants submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Communication. 5.1 Coming to review proceedings, he submitted that as per board circular dated 19.12.1999 the adjudicating authority has become functus officio when the order is issued. Therefore, addition of finding of time barred for 2007-08 to 2009-10 in corrigendum is not proper. Corrigendum can be issued only for clerical/arithmetical/typographical error. However, ST3 returns for October 9 to March 10 was issued on 25.04.2010. Therefore the demand for the said period i.e. October 9 to March 10 should have been included as the Show Cause Notice was issued on 24.04.2015. 5.2 Coming to the interest earned by the bank on its loans and advances, the Appellants submitted that it is a consideration received for its taxable services lending and it is not towards any exempted services. However the amount is not part of the value u/s 67 it cannot be called exempted services. The learned AR submits that the contention that as interest is not part of taxable value, interest arriving out of lending cannot be exempted services is erroneous. Similarly analogy was found incase of trading which was not specifically mentioned as exempted services. However various High Courts and tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 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. The Appellants submitted that in terms of section 67 of the Finance Act, 1994 the interest on loans was not includable in the value of taxable service upto 17.04.2006. 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. The Appellants submitted that irrespective of notification exempting the interest the service cannot be treated as an exempted service. The lending service which includes ODCC and bill discounting is a taxable service. However for calculating taxable value interest is to be deducted. The Learned Authorised Representative on the other hand submits that the issue is squarely decided by the Tribunal in the cases of UCO Bank 2014 (36) STR 1169 (Tri-Kolkata) and in the case of HDFC Bank Ltd by order No. A/87114/2018 dated 16.07.2018. 6.2 In order to appreciate the rival su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loans, cash credit or overdraft facility. However all the purpose of the customer, or the bank financial institution all the recoveries made against such facilities would be classified under the category of interest. It is not the case after deregulation of the Banking and Financial services that the interest rates are externally dictated, but are to be determined by the banks themselves taking into account their cost of funds, transaction costs etc (Para 4.1 of the Master Circular). Thus the claim of the Appellant in respect of administrative fees etc., charged by them separately in respect of the CC/ OD services appear to be contrary to the said Master Circular. In view of the above it is seen that the Banks are free to decide the interest after taking into consideration administrative expenses if any. In view of the above we don t find merit in the Appellants argument that interest is to be deducted only for the purpose of calculating the taxable value. As we conclude that the lending of loans on interest as an exempted service. 6.3 We find that Rule 6 of the Cenvat Credit Rules 2004 reads as under 6. Obligation of manufacturer of dutiable and exempted goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and total value of dutiable and exempted goods manufactured and removed, during the financial year, and 1(P) denotes total CENVAT credit taken on input services during the financial year; In view of the above, we come to the conclusion that 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. Hence, we do not find any infirmity in the impugned order passed by the commissioner. We find that such a view is in conformity with decision of the Kolkata Bench of Tribunal in case of UCO Bank Vs Commissioner of Service Tax Kolkata (Supra) and these bench in the case of HDFC (Supra). 6.4 Coming to the leviability of Service Tax on the Appellants on the alleged supply of manpower to their subsidiary we find that this bench has already decided the issue in the case of Axis Bank 2017 (1) TMI 607 CESTAT Mumbai. It was held that the Appellants have deputed their employees to their sister concern who have availed the service of such employees. The sister concern wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Chennai Petroleum Corporation Ltd (Supra), they being a public sector undertaking allegation of suppression fraud etc cannot be alleged. The commissioner has only given a cursory findings that the necessary information was not given in the ST-3 returns. We are not able to come to a conclusions on this aspect on the basis of the submission of the Appellants also. We find that at this juncture this bench is not in a position to decide whether all the material information was disclosed to the department and as to whether the necessary information was contained in the ST-3 returns submitted periodically or otherwise. 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. 6.8 Coming to the submission of the Appellants that in respect of reversals they have made before the issue of Show Cause Notice, no confirmation of duty should have been made in the OIO or in the corrigendum and no penalty should have been imposed, we see that the Appellants have revers ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
