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TMI Blog2024 (8) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal. 2. In their submissions, the appellant has summarized the demand of Rs.1,03,31,304/-, confirmed in the impugned order and their defence against the confirmation, as under: - 2.1. Rs.4,97,545/- has been confirmed as service tax short/not-paid due to non-incorporation of entire amount of income from commission, Brokerage, Processing Fees, Locker Rent, etc., in the taxable value. The appellant submits that in the Show Cause Notice and in Order-in-Original, it has been alleged that they have failed to incorporate the entire amount of their taxable service in the ST-3 returns filed by them and as a result there is substantial part of service tax amount is found to have short paid/not-paid by the appellant. But the said findings are totally wrong and baseless and not supported by evidence. The said findings are based on wrong method of calculation adopted by the auditing officials. The appellant gave a comparative chart showing the figures as adopted by the auditing officials and confirmed by the Ld. Commissioner, and the figures as per audited statement of accounts for the relevant period/year. As per the calculation of the appellant, they have paid excess service tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that under section 56 of the Banking Regulation Act, 1949, provisions of the said Act are also applicable to the appellant being a schedule bank. Under section 5(b) of the Banking Regulation act, 1949, "Banking" means the accepting, for the purpose of lending or investment, of the deposits of money from the public repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. Here lending means, Bank may lend either secured loan or unsecured loan either against primary security or without security; Bank can lend money only against charging of mortgage/Hypothecation. Where original ownership should always prevail with borrower; Bank has an option to exercise its power to crystallize the charge in case of exigency. Further, the appellant submits that under section 9 of the Banking Regulation Act, no Bank can hold any asset for non-banking purpose or engage itself for any transaction other than banking as defined above. Lease Financing/Hire purchase transaction is out of purview of "Banking" as defined above; in case of the appellant, the essential ingredients i.e. ownership of the asset before it was leased out is missing and as such the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid CENVAT Credit of Rs.8,21,910/- for payment of service tax, Education Cess and Higher Education Cess. It is stated that subsequently the appellant came to know that the said CENVAT Credit is not available to them as the interest income from Food Credit Consortium is an exempted service on which no service tax is payable; So, subsequent to return period from October 2011 to March 2012, the appellant stopped to claim and avail CENVAT Credit for the said service and also not carried forward the unutilized CENVAT Credit for the period from October 2011 to March 2012 to the next return period; However, they continued to record the CENVAT Credit for service tax charged by State Bank of India separately in their books of account, but paid full amount of service tax without any deduction for CENVAT Credit. 3.2. The appellant submits that submitted that the said Irregular availment of CENVAT Credit of Rs.48,18,851/- consists of two parts: a. Non production of CENVAT Credit account/register and inadmission of CENVAT Credit of Rs.8,09,850/-: In the Show Cause Notice it was alleged that "during the audit they could not produce any CENVAT Credit account/register on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by limitation; the Show Cause Notice in this case was issued by invoking extended period of limitation; since the Bank has not suppressed any material fact, or wilfully defaulted to pay service tax or had any intention to evade service tax and there was no short payment/non-payment as alleged, the demand confirmed by invoking extended period of limitation is liable to be set aside. Reliance in this regard is placed upon the ratio of the judgement in Kerala Transport Dev Finance Corporation Ltd. v. CCE [2007 (8) S.T.R. 302 (CESTAT - Bang.)]. 6. The Ld. Authorized Representative appearing for the Revenue reiterated the findings in the impugned order. 7. Heard both sides and perused the appeal documents. 8. We observe that the demand of service tax in the impugned order has two parts: (i) Rs.4,97,545/- has been confirmed as service tax short/not-paid due to non-incorporation of entire amount of income from commission, Brokerage, Processing Fees, Locker Rent, etc., in the taxable value of service. (ii) Rs.98,33,759/- has been confirmed towards non-payment of service tax on Finance Leasing/Hire Purchase income. 8.1. Also, there is Irregular availment of CENVAT Credit of Rs.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupation of the asset by the lessee; c) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and d) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment. 9.1.2. From the above, we observe that before terming a transaction as financial leasing, the following points must be proved. a) The transaction is for leasing of a specific asset. b) The Lessor is the owner of that specific asset before it was leased out. c) The Lessee becomes the owner of the asset at the end of the lease period after making the lease payment. 9.1.3. The appellant enclosed copies of some loan agreements. A perusal of the loan agreements reveal that the contract is meant for lending of money and not for leasing of any specific assets for the following reasons: (i) The transaction entered by the appellant is not for leasing of any specific assets. The transaction is for lending of money. (ii) The appellant was neither the owner of the specific assets before it was leased out nor became the owner of those specific assets after it was purchased by the borrower with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which needs to be verified by the adjudicating authority, to ascertain the factual position. We observe that the adjudicating authority has not given any finding in the impugned order on the above submissions made by the appellant. Thus, the issue is to be referred back to the adjudicating authority to examine the factual position. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. 10.2. Regarding the disallowance of CENVAT credit of Rs.8,21,910/-, we observe that the appellant made some investment along with 60 other member banks in the Consortium for Food Credit under leadership of State Bank of India. For the period from October 2011 to March 2012, State Bank of India charged service tax of Rs.8,21,910/-. During the said period, the appellant had taxable service of Rs.8,27,787/- and service tax liability including Education Cess and Higher Education Cess of Rs.85,263/-, and the appellant utilized Rs.85,263/- out of the aforesaid CENVAT Credit of Rs.8,21,910/- for payment of service tax, Education Cess and Higher Education Cess. Subsequently the appellant came to know that the said CENVAT Credit is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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