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Landmark Service Tax Judgment - Banking and Financial Services

Taxable Services - Banking and Financial Services

Case Laws Related

  • STO 2013 CESTAT 951
  • Banking & Other Financial Service: Demand: Stay: For tax liability to enure there should thus be a confluence between the specified entity and the specified service. This connect which is integral to the liability to tax is prima facie absent in the present case as the petitioner's claim to not being either a banking company, a financial company or even a non-banking financial company during the relevant period i.e. prior to 16.8.02, is not disputed: Unconditional stay granted.

  • STO 2013 CESTAT 969
  • Banking & Other Financial Services: Commission earned by acquiring bank from the merchant establishments on pre-arranged basis with the concerned issuing bank whether liable to service tax under the category of banking and financial services for the period prior to 01/05/2006: service brought under the purview of tax net only with effect from 01/05/2006 under the category of "credit card, debit card, charge card or other payment card services": Matter referred to Larger bench.

  • STO 2013 CESTAT 979
  • Banking & Other Financial Service: 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/documentation 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.

  • STO 2013 CESTAT 1342
  • Banking & Other Financial Services: Demand: Stay: Plea that service provided to members not Taxable: Entire amount of service tax stands paid: Pre deposit waived for remaining amounts.

  • STO 2013 CESTAT 957
  • Banking & Other Financial Service: 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/documentation 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.

  • STO 2013 CESTAT 1340
  • Banking & Other Financial Services: Demand: Stay : whether pre-closure charges levied in respect of loans is liable to service tax or not has been considered and decided against the assessee: Appellant is passing through serious financial difficulties and in the year 2011 as well as 2012 they had suffered huge losses and they are yet to recover from the same: Plea that the appellant is not in a position to pay the borrowed capital and they have been pursuing restructuring of loans with the lenders and the promoters have provided additional capital to facilitate restructuring of loans and at this stage the appellant is not in a position to make the deposit and requests a lenient view on this basis: Only partial amount ordered to be pre deposited.

  • STO 2013 CESTAT 1508
  • Service Tax: Banking and other Financial Leasing Service: 'Operating Lease' and 'Financial Lease': Scope and liability: In the case of 'Operating Lease', the applicant had entered into an agreement with the corporate customers for taking motor vehicles on lease for the executives and at, the end of the lease period, the vehicles were sold to same executive, who pays cash. Thus, there is some force in the submission that the 'Operating Lease' and 'Financial Lease' are different, when the vehicle is sold to the lessee or third party. The learned counsel placed a chart to illustrate that the rental charge in 'Financial Lease' is higher than 'Operating Lease', as the lessee is the owner of the asset in 'Financial Lease'. The applicant had not placed any material on record to establish the distinction between 'Operating Lease' and 'Financial Lease' in support of both the agreements. The Apex Court had observed in the case of Association of Leasing & Financial Service Vs. Union of India reported in STO 2010 SC 712, that it is mandatory for NBFCs to follow Accounting Standard [AS-19] for 'Financial Lease'. The Accounting Standard followed by the applicant for the impugned activities is not correct.(Para 5).

    Pre-deposit ordered.

  • STO 2013 CESTAT 766
  • Banking & Other Financial Services: Commission paid for obtaining loan from abroad: if the impugned corporate guarantee was given in relation a banking and financial service specified at section 65 (12) of Finance Act 1994, there may be force in the argument of Revenue. But the Show cause Notice or adjudication proceedings do not bring out any such case: Pre deposit waived.

  • STO 2013 CESTAT 666
  • Banking and financial services: Levy of service tax on services received by them from foreign bank for maintenance of 'Nostro Accounts' and also for collecting bank charges for 'swift facilities': Appellants plea of bonafide accepted: Pre deposit waived.

  • STO 2013 CESTAT 606
  • Banking & Other Financial Services: Export of Services: Exemption under Notification No. 21/2003 dated 20/11/2003 available when the consideration for the services rendered was received in foreign currency: For the period prior to 20/11/2003, Board's circular dated 24/05/2003 clarifies that no service tax would be leviable on export of services for which consideration is received in convertible foreign exchange.

  • STO 2013 CESTAT 285
  • Banking & Other Financial Service: Financial Leasing: Even during the period prior to 01.06.07 when there was no definition of the term "Financial Leasing" in Section 65(12), this term did not cover the “operating lease agreements” in which there is no clause giving the lessee, at the end of the lease period, entitlement to purchase the asset an option to purchase the asset: It is well settled law that a term in a taxing statute, in absence of its definition in it, is to be interpreted in the sense in which it is understood in common parlance or trade parlance and therefore the term "financial lease" has to be understood according to its meaning in lCAl accounting standards or International accounting standards: Departmental appeal dismissed.

  • STO 2013 CESTAT 324
  • Banking and other Financial Services: Applicants have been leased out Computer Colour Display Machine (CCD) to the distributors. It is the contention of the Revenue that leasing out the equipment is covered under Banking and other Financial Services therefore, they are liable to pay service tax. Department of Posts is not similar to a bank or a financial institution and hence does not fall within the category of any other similar service provider. Stay granted.

  • STO 2013 CESTAT 371
  • Banking & Other Financial Services: External Commercial Borrowings (ECB) and issue of Notes for raising of funds from the abroad: Limitation: Penalty : Section 73(3): Gross violation of the provisions of the Finance Act, 1994: Show-cause notice violative of the provisions of Section 73(3) of the Act, where it is provided that if before the issue of show-cause notice, the assessee calculates and pays the apparent tax liability and informs the authority of such payment, who, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the amount so paid.

  • STO 2013 CESTAT 228
  • Banking Service: Renting of Immovable Property: Banks took action under SARFESI Act and factories of defaulter taken over and leased out: Activity falls under RIP service: Service tax already paid: Stay granted from balance amounts.

  • STO 2013 CESTAT 91
  • Banking & Other Financial Services: Respondents collected ESIC and PF and deposited with Government: These are statutory functions and commission earned on such collections not taxable: However, the respondents already paid service tax with interest before issuance of show cause notice: They need not be visited with penalty. 

  • STO 2013 CESTAT 515
  • Banking and Other Financial Services: Demand: Stay: Demand made on the amount said to have been received by the appellants under the head "postal recovery charges" from their customers: Charges received from their customers are reimbursement of postal and courier expenses incurred by them : Appellants already paid certain sum which has been considered as sufficient pre deposit: Waiver granted from pre deposit of balance amounts.

  • STO 2012 CESTAT 1123
  • Banking & Other Financial Services: Demand: Providing service of payment and receiving money on behalf of the government in respect of various transactions such as public deposit, RBI bond, EPF, senior citizen saving scheme, compulsory deposit scheme etc not covered: Demand set aside.

  • STO 2012 CESTAT 996
  • Banking & Other Financial Services: A bank run by co-operative society is also liable to pay Service Tax under the category of 'Banking and other Financial services': Penalties under Section 77 and 78 set aside as simultaneous penalty under Section 76 and 78 cannot be sustained.

  • STO 2012 CESTAT 874
  • Banking & Other Financial Services: Stay: Demat charges: Since appellants have already deposited sufficient amount: Stay granted from balance amounts.

  • STO 2012 CESTAT 817
  • Banking & Other Financial Services: Difference between “lending” or “arranging”: out of the 16 lenders who provided the syndicated loan to the appellants from abroad, 10 lenders were also arrangers and these 10 lenders provided almost 95% of the loan to the appellant. In other words, the lenders themselves have acted as arrangers in bulk of the transactions and, therefore, it could not be stated that the 'arrangement' was different from 'lending' as there is a close nexus between the arranging for the loan and actual lending of the loan: Directions issued for pre deposit.

  • STO 2012 CESTAT 860
  • Banking & Other Financial Services: Out of Pocket Expenses: Stay: After considering the issue on prima facie merits directions issued for partial pre deposit.

  • STO 2012 CESTAT 805
  • Banking & Other Financial Services: Services provided by non-resident Joint Bank runners and Joint Lead Managers to the appellant for facilitating issue of Global Depository Shares (GDS) falls under Banking & Other Financial Services : Directions for pre deposit issued.
     

  • STO 2012 CESTAT 893
  • Banking Services: Bank run by a cooperative society is required to pay service tax under the category of "banking and other financial services".

  • STO 2012 CESTAT 624
  • Banking & Other Financial Services: Non inclusion of terminal charges recovered from the investors for the taxable value is covered in their favour: Waiver from pre deposit granted. 

  • STO 2012 CESTAT 447
  • Banking & Other Financial Services: Activity of providing swiping machine to merchants: Department sought to demand tax under BOFS: Other co-ordinate benches granted unconditional stay to similarly placed banks : Unconditional stay granted.

  • STO 2012 CESTAT 179
  • Banking & Financial Services: Stay: Even co-operative banks also covered under the definition and liable to pay tax.

  • STO 2012 CESTAT 413
  • Banking & Other Financial Services: Cash Management: Non-taxability of cash management for the period prior to 01.06.2007 stands settled.

  • STO 2012 CESTAT 99
  • Banking & Financial Services: Activity of Provision and transfer of information and data processing covered: Directions for pre deposit issued. 

  • STO 2012 CESTAT 170
  • Banking & Other Financial Services: Lending Services & Bank Guarantee: Period prior to 18.4.2006 appellants not liable to pay service tax on import of services: For post period matter remanded.

  • STO 2012 CESTAT 333
  • Banking & Other Financial Services: Appeals by department as well as assessee: Remand: Tribunal has been taking a consistent view in such cases where the Department itself is questioning the legality and propriety of the impugned order and the Appellants (Assessees) are also in appeal.

  • STO 2012 CESTAT 410
  • Banking & Other Financial Services: a bank run by a co-operative society will not come within the scope of entry 65 (105) (zm) and 65 (12) during the relevant time.

  • STO 2011 CESTAT 202
  • Service Tax: Banking and financial services received from a foreign country: Demand: It is established that reverse charge tax shift mechanism operating under Rule 2(1)(d)(iv)of the Service Tax Rules, 1994 read with Section 66A of Finance Act, 1994 is effective only from 18.4.06. Therefore, the demand of Service Tax and interest thereon for the period prior to 18.4.06 under Reverse Charge of Tax shift mechanism is not applicable. In the present case, the appellants have received the services of the foreign based bank and made the payments of the charges to the bank in the year 2005 i.e. prior to the enactment of the Finance Act, 1994 and therefore the demand in the present case is not tenable and liable to be set aside. Hence there is no question of charging interest and imposition of penalty."(Para 4). There is no infirmity in the order of Commissioner (Appeals).(Para 5).Revenue's appeal is accordingly rejected. The Stay Petition also gets disposed off.(Para 6).


  • STO 2011 CESTAT 344
  • Business Auxiliary Service: Cash Management Service: Collection of bills for electricity and telephone not covered under BAS.

  • STO 2011 CESTAT 136
  • Service Tax: Banking and Financial Services: Stock Broker Services: NSE/BSE transaction charges and SEBI turn over fees: Remand: In the case of M/s. Anagram Capital Ltd. as reported in 2010 (17) S.T.R. 55 (Tri-Ahmd), the Tribunal observed that such charges were liable to Service Tax from May 2008. As the period in the present appeal is before May 2008 and as the Commissioner (Appeals) has not decided the appeal on merit, the impugned order is required to be set aside and matter remanded for decision on merit. (para 2,3)

  • STO 2011 CESTAT 121
  • Service Tax: Valuation: Banking and Financial services: Extended period of Limitation: When the respondents have not disclosed the entire taxable value in the statutory ST - 3 Return, and they have omitted to include part of the value coupled with non-payment of requisite amount of tax in respect of such amounts, it definitely amounts to suppression and willful mis-statement and hence the extended period of limitation is applicable. Hence, the order of the lower appellate authority is modified and the duty demand along with interest relating to the extended period of limitation is confirmed. (para 3)

    Service Tax: Valuation: Banking and Financial services: Penalty: Section 80: Considering the fact that the respondents are a public sector-bank and also other attendant circumstances of the case, the penalties imposed on the respondents are wavied invoking the provisions of Section 80 of the Finance Act, 1994. (para 4)

  • STO 2011 CESTAT 178
  • Service Tax: Refund: Notification No. 41/2007-ST dt. 06.10.2007: Remand: Primarily, the order of the Commissioner (Appeals) has been passed on the ground that specific discrepancies noted were not reconciled by the appellants. Set aside the order of the Commissioner (Appeals) and remand the matter to him for fresh consideration after granting reasonable opportunity of hearing and after taking into account the evidence that may be produced by the appellants. (para 6)

  • STO 2011 CESTAT 28
  • Service Tax: Banking and other Financial Services: Charges collected from credit card-holders on service through credit cards availed by them abroad: Pre-deposit The learned JCDR has relied on a stay order passed by a co-ordinate Bench in the case of Citybank N.A. Vs. Commissioner of Service Tax, Chennai 2009 wherein for a comparable period, it was held that recoveries made by Citybank from their credit card holders in respect of transactions done abroad were covered by “credit card service” galling clause (ii) of BOFS under Section 65(12) of the Act. HDFC has no financial hardships. In the result, there will be a direction to the appellant to pre-deposit the amount of Rs. 71 lakhs within four weeks . (para 1,2)

  • STO 2011 CESTAT 108
  • Service Tax: Banking and Financial Services: Money Transfers: Export of Services: Remand: The show cause notice in paragraph 7 proceeds on the ground that the value of services received by the appellant is in India rupees, while it is the claim of the appellant otherwise. Since the evidence of the amount so received in foreign exchange was not produced before the Adjudicating Authority, the Adjudicating Authority came to a conclusion that this service is not export of services. In view of this, remit back the matter to the Adjudicating Authority to reconsider the issue afresh after following the principles of natural justice. The impugned order is set aside and appeal is allowed by way of remand. (para 5)

  • STO 2011 CESTAT 270
  • Service Tax: Banking & Financial Services: Charges for pre-payment of loans: Foreclosure is ending the loan already given and cannot be treated as lending to the customers of loan and the same cannot be treated as rendering any services by the financial institution. It is a case of withdrawing the services rendered, at the request of the customers, and the foreclosure premium is a kind of compensation for possible loss of interest revenue on the loan amount returned by the customers. Therefore, the activity of foreclosure of loan can not be treated as "banking and financial services." Set aside the impugned order and allow the appeal with consequential relief as per law. (para 7,8)

  • STO 2010 CESTAT 680
  • Banking & Other Financial Services: Collection of Octroi on behalf of Municipal Corporation not taxable under this category. Exclusion of expression "but does not include cash management" from 1.6.2007, does not mean its inclusion waiver granted.

  • STO 2010 CESTAT 670
  • Service Tax: Banking and Financial Services: Pre-deposit: In view of the fact that there was no proposal in the show cause notice relating to suppression of facts or mis-declaration etc., the issue is required to be considered in detail at the time of final hearing. Appellants have been able to make out a prima facie case so as to waive the pre-deposit of service tax and penalty imposed. (para 2).

  • STO 2010 CESTAT 585
  • Service Tax: Banking and Other Financial Services: Waiver of pre-deposit and stay: Considering the fact that the issue needs to be gone into detail and also it being a question of interpretation, partial pre-deposit is ordered and stayed residual recovery till final disposal of the appeal.(Para 7). 

  • STO 2010 CESTAT 238
  • Banking and other financial service: “Banking and other financial service” clearly indicate with regard to the asset management and also refers to depository and trust services but does not include cash management.

    Management Consultancy Service: Merely providing expert employee as agent for working day to day affairs is not Management Consultancy.

  • STO 2010 CESTAT 50
  • Service Tax: Banking Services: Penalty: Once registered with the department for payment of service tax, they are expected to be aware of the relevant provisions of law. Had the appellant acted in terms of Rule 6 (1), as amended with effect from 1.4.2005, they would not have defaulted monthly payments of service tax. For the period April 2005 to March 2007, the benefit of Section 80 of the Finance Act, 1994 is not admissible to the appellant. In other words, the decision of the lower appellate authority for avoiding such a penalty altogether cannot be accepted. As per Section 76, as it stood between 10.9.2004 and 18.4.2006, the maximum penalty, which could be imposed on an assessee in an appropriate case, was Rs 200/- per day of delay, the minimum being Rs 100/- per day of delay, from which it appears that, during the said period, the adjudicating authority had a discretion, which, in the present case, was not exercised. After 18.4.2006, the penalty could be not less than Rs 200/- per day of delay or 2% of the service tax per month, whichever was higher. Obviously, during this period, there is no discretion. There was no delay in payment of service tax for the period upto February 2005. Therefore, there can be no penalty on the assessee on the ground of delayed payment of service tax for such period. All these aspects are to be considered by the original authority. In order to enable that authority to do the needful the impugned order is set aside and this appeal allowed by way of remand. (para 4)

  • STO 2009 CESTAT 1643
  • Service Tax: Banking and Other Financial Services: Activity of financing for the purchase of vehicles terming it as "hypothecation finance": Scope and liability: The appellants are lending money as per the records available and receiving interest from their customers on such loans and this is undisputed. The period involved in this case is from 1/8/2003 to 30/9/2004. Revenue wanted to charge service tax on such loans and interest thereon, as collected by appellant. The activity of lending finance was brought under the Service Tax net by expanding the definition of `Banking and Financial Services' w.e.f. 10/9/2004 by Notification No.13/2004-ST dt. 10/9/2004. The said Notification also exempts the inclusion of interest on loan, in the gross value, to be considered for discharge of Service Tax. Identical issue has been decided by this Bench in the case of Praveen Finance Private Ltd - STO 2007 CESTAT 1401. The said ratio as under:-"5. On a very careful consideration of the issue, we find that the appellants are simply lending money as per the records available and receiving interest. The lending during the relevant period was not a taxable service. Even if it is held that the appellant is giving money under the "Hire Purchase Scheme", it is clearly seen that the Mumbai Bench of the CESTAT in the case of Bajaj Auto Finance - STO 2007 CESTAT 45 has clearly drawn a distinction between Hire Purchase Service which is taxable and Hire Purchase Finance Service which is not a taxable service. In any case, it is very clear that the appellants have not rendered the services of Hire Purchase. They only lent money to the borrowers. Therefore they cannot be brought under the category of taxable services under banking and financial services.”(Para 5,6).

    Appeal allowed.

  • STO 2009 CESTAT 1543
  • Service Tax: Taxable services classifiable as ‘operation of bank accounts' during the period 10.09.2004 to September 2007 as an agent of the Reserve Bank of India (RBI): Scope and liability: The bank was appointed as an agent of the RBI as per Section 45 of the RBI Act 1934. As per the agency, the bank was bound to function as the agent of the RBI at any place in India for purposes specified by the RBI under Notification No 7/06 ST dated 01.03.2006. Taxable services provided, or to be provided to any person by RBI, were exempt from service tax. As the bank functioned as an agency of RBI, in terms of this exemption, the operations of the bank on behalf of RBI were exempt from service tax. In support of the argument that the exemption available to a principal extended to its agent, the judgment of the Apex Court in the case of State of Madras Vs the Cement Allocation Coordinating Organization reported in Manu/SC/0636/1997 is supportive. Stay Order No. dated 01.04.2009 in the case of Karnataka Land Army Corporation Ltd. Vs. CST Bangalore STO 2009 CESTAT 978 in support of the argument that statutory functions of the state were not exigible to service tax. In terms of the above ratio of the judgment of the Apex Court, the exemption extended to RBI is available to the appellant bank, being its agent. (Para 3,6,8)

    Stay granted.

  • STO 2009 CESTAT 305
  • Service Tax: Banking and other financial services: Activity of installed a system called Magnetic Ink Character Recognition (MICR) which was utilized for clearing of cheques: Penalty: As a public sector undertaking they had no intention whatsoever in evading service tax and immediately after clarification received from the Board they promptly paid the service tax. As the Commissioner (appeals) has already waived penalty under Section 78, on the very same ground the penalties under Section 75A, 77 & 76 should also be waived. On this issue on the liability to service tax RBI gave an opinion dated 29.10.2004 to the effect that such operations are not taxable. However, C.B.E.C. who, after consulting the Ministry of Law, issued a clarification dated 25.2.2005 stating that the same is liable to service tax under the head "Banking and other financial services." In the facts and circumstances mentioned above, there is sufficient cause on the part of the appellant in failure to pay the service tax and, accordingly, provisions of Section 80 is rightly invokable. Penalties waived.(Para 6,7).

    Appeals disposed off.

  • STO 2008 CESTAT 545
  • Service Tax: Anywhere Banking Business (ABB) transactions: Scope and liability: Under the ABB service a customer can operate his account from a branch other than the branch he is having his account. He can operate his account by depositing or withdrawing money from other branch. This service of operation of account come under the scope of service tax from 10.9.2004 when the definition of banking service was amended. As this service is only for operation of bank account by the customer, therefore, there is no infirmity in the impugned order.(Para 5).

    Revenue appeal dismissed.
     

  • STO 2009 CESTAT 32
  • Service Tax: Business Auxiliary Services / Banking and Other Financial Services: Activity - collecting telephone bills on behalf of BSNL: Scope and liability: The issue in the present case is directly covered by the judgment rendered in appellants own case as reported in STO 2008 CESTAT 74. The operation of account of any of the client cannot be considered as coming within the category of 'customer care services'. They are not providing any service to the customers of their clients. It cannot be said to be activity connected with 'customer care service'. The definition of 'customer care service' has to be read along with the 'business auxiliary services' which term is explained in Section 65(19). Predominantly it refers to promotion, marketing and sale of the product which they are not doing and if any agent collects cheques their behalf, then it is considered as incidental to the promotion or marketing or sale of goods which has not been done. Therefore the category 'business auxiliary service' is not appropriate and not covered in their activity. The activity which they are carrying on is that of 'banking and other financial services' and in that category, the activity of cash management is excluded in category italic (v) of the said definition. The appellants activity is in the category of cash management in as much as the clients are operating their accounts and cash flow of the client is coming to the clients, account. Therefore, the activity is that of cash management which is excluded from 'banking and other financial services'. The appellants have made out a case that there are not covered under the category of 'customer care service' in the main category of 'business auxiliary service' and hence their contention is required to be accepted in view of judgment in the case of Dr. Lal Path Lab Pvt. Ltd. v. CCE, Ludhiana STO 2006 CESTAT 366. (Para 4).

    Appeal allowed.

  • STO 2008 CESTAT 384
  • Service Tax: Banking and Other Financial Services: Scope and liability: Prior to 1-5-06, credit card services were taxed with limited and specific scope of services rendered by banks to card holders and that credit card services in the nature of ‘settlement’ were not to be taxed prior to the said date. Accordingly, if this be the position of the service rendered by the Acquiring Bank to Merchant Establishment, it would not be different in relation to the service received by the Acquiring Bank from VISA. The consultant has also argued that VISA had their offices in India during the material period and, therefore, service tax, if any, ought to have been recovered from them in terms of the relevant provisions of the Finance Act, 1994 as they stood prior to 18-4-2006. In this connection, it is pointed out that it was on 18-4-06 that Section 66A was inserted in the Finance Act, 1994 for making service-recipient liable to pay service tax where the service is received from a foreign party having no office in India. In this connection, reliance has been placed on the Tribunal’s decision in Foster Wheeler Energy Ltd. v. Commissioner, STO 2007 CESTAT 219, wherein services provided from outside India prior to 18-4-06 were held not exigible to service tax in the hands of the service-recipient who was resident in India.(Para 1).

    Pre-deposit waived, stay allowed.

  • STO 2009 CESTAT 147
  • Service Tax: 'Credit Card Services', under the category of 'Banking & Financial Services' under Section 65 (12) (vii) for the period August 2002 to September 2004: Scope and liability: Appellant took various pleas with regard to the non-inclusion of them under the category of 'Banking and other Financial Services'. After the introduction of the said category of 'Credit Card Services, they are paying the service tax. They are contesting for the previous period on the ground that like services carried out by them would not come under the category of 'Banking and other Financial Services' and relied on the Larger Bench judgment rendered in the case of M/s Hindustan Zinc Ltd. reported in STO 2008 CESTAT 321. wherein it has been held that the date of applicability of new category will be applicable for the purpose of demanding service tax and the category which is not applicable cannot be imposed. The ratio of the cited judgment has been followed by this Bench in the case of M/s Fireepro Systems Pvt. Ltd. Vs, Commissioner of Service Tax, Bangalore [2008- TlOL-1377-CESTAT-BANG] wherein it has been held that the latter inclusion of some aspect in the scope of levy will have to be taken as non-inclusion of the same earlier, when the other portion remained the same. The learned Chartered Accountant also refers to the ruling rendered by the Delhi Bench in the case of M/s Bharat Aluminum Co. Ltd. Vs. CCE, Raipur [2008-TlOL-1401-CESTAT-DEL] with regard to the inclusion in the new category and exclusion in the old category. There was no intention to evade payment of service tax and that there is no suppression of facts in the matter as all the details were disclosed in the Balance Sheet. The appellants have made out a strong case both on merits and time bar.(Para 1,4).

    Stay granted.

  • STO 2009 CESTAT 18
  • Service Tax: Banking and Financial Services for the period from 16.7.2001 to 9.9.2004: Activity of lending money: Scope and liability: The appellants had only been lending money for interest and in the strict terms they had not been carrying out the hire purchase activity. It is also very clear from the legal opinion which they had obtained that their activity would be subjected to Service Tax only with effect from 10.9.2004. The Commissioner has taken a portion of the legal opinion and has come to the wrong conclusion. Moreover, there is absolutely no justification for invocation of the longer period. The decision of the Hon'ble Mumbai Tribunal in the case of Bajaj Auto Finance Ltd. Vs. CCE, Pune STO 2006 CESTAT 155 which follows the judgment of the Hon'ble Supreme Court in the case of Sundaram Finance Ltd. Vs. State of Kerala & Another as reported in 17 STC 480 (SC). The Tribunal has held that "hire purchase" and "hire purchase financing" are not synonymous. Further, the same view point is upheld in the case of : (i) Kerala State Financial Enterprises Vs. CCE, Cochin - 2008 (9) S.T.R. 159 (Tii.-Bang.) STO 2007 CESTAT 1171. (ii) Praveen Autofin Pvt. Ltd. Vs. CCE, Mangalore - STO 2007 CESTAT 1401 (iii) Kusalava Finance Ltd. Vs. CCE, Guntur STO 2007 CESTAT 1375. (Para 5,6).

    Appeal allowed.

  • STO 2009 CESTAT 16
  • Service Tax: Management Consultancy' service: Activity of acquisition of shares : Scope and liability: The term Management Consultant service, as already extracted, refers to any service provided to a client by a management consultant in connection with the management of any organization in any manner. The appellant is a Limited Company, who is carrying on the activity of manufacture of MS Ingots. Incidentally, they assisted in acquiring the shares from M/s. Akshay Ispat & Ferro Alloys (P) Ltd. for which, they charged certain amount as commission. Revenue wants to levy Service Tax under the category of Management Consultant. In terms of the definition, the appellant is not carrying on the activity of management consultant but are manufacturers of Ferro alloys. Incidentally, they helped in the act of acquisition of shares. This activity on their part cannot be brought within the ambit of Management Consultant as per its definition. The definition itself clarifies that the activity should be done by a management consultant and it should be in connection with the management of any organization in any manner. The appellant has not carried out any activity of management consultant in connection with the management of any organization in any manner. The Commissioner has relied on the Board's Circular No. 1/1/2001-ST dated 27.06.2001, which clarifies the activity of management consultant, who renders services in an advisory capacity in respect of merger and acquisition transaction. Circular states that such an activity of merger and acquisition transaction are not to be treated as Management Consultant. They have to be treated only under Banking and Other Financial Services. There is a mis-application of the Circular. The appellants are not Management Consultant by merely playing a role in acquiring shares for a particular person. The impugned order is not legal and proper.(Para 4).

    Appeal allowed.

  • STO 2008 CESTAT 131
  • Body Corporate: The appellants are not any non-banking financial company and, therefore, applying ejusdem generis principle, they are prima facie not covered by the expression “body corporate” used in the definition of “banking and financial services” in Section 65(10) of the Finance Act.

  • STO 2008 CESTAT 221
  • Banking & Financial Service: Service rendered by appellants to Bank as lending agent not covered by the category of Banking & Financial Services during the material period, same covered later on. Prima facie a strong case. Promotion of any service would be covered and it is not necessary that promotion should be of taxable service. Appellants put to terms. Stay partly granted.

  • STO 2007 CESTAT 1401
  • Hire Purchase : No Service Tax can be demanded in respect of the income derived for the services rendered as Hire Purchase Financier

  • STO 2007 CESTAT 1375
  • Hire Purchase Finance scheme : No Service Tax can be demanded in respect of the income derived for the services rendered as Hire Purchase Financier. The income on account of leasing of the machinery, is liable to be confirmed. As the Order-in-Original does not provide split up of income, matter remanded with specific directions.

  • STO 2007 CESTAT 517
  • Service Tax: Banking and other Financial Services: Scope and liability: 'Banking and other Finance Services' are defined in Section 65(12) of the Act. 'Financial leasing services including equipment leasing and hire-purchase' provided by a body corporate is covered under the category of 'Banking and other Financial Services'. The lower authorities have relied on the Ministry of Finance Circular No. BII/1/2001-TRU dated 9-7-2001 wherein it has been clarified that in case of Hire-Purchase Agreement, interest or finance charges together with processing charges/documentation charges constitute value of taxable service. In the instant case, it is not disputed that the appellants have not charged any amounts on accounts of lease management fee, processing fees or documentation charges, etc., but interest was charged on unpaid amount of credit. The dispute relates to levy of service tax on interest amount received on leasing of machinery/equipments by the appellants, who are a body corporate in terms of Clause (7) of Section 2 of the Companies Act, 1956. The period involved is from 16-8-2002 to 31-3-2004. The inclusion of 'interest' element in the value of taxable services vide the Ministry of Finance Circular No. BII/1/2001-TRU dated 9-7-2001 is open to question, since the element of rendering any 'service" for recovering interest is absent. Interest cannot be considered as consideration for rendering any service. In any case, Clause (viii) of Explanation 1 to Section 67 inserted by Finance (No. 2) Act, 2004 now specifically provides that 'interest on loan' will not form part of the values of taxable service. In this context, it has been clarified by the Ministry vide Circular No. 80/10/2004-ST dated 17-9-2004 that 'all such interests which are in the nature of interests on loans would thus remain excluded from the taxable value.' The Service tax demand confirmed is not sustainable. The appellants have furnished sample copies of the invoices relevant to the period in question to show that the sales tax is paid by them on the equipments leased to the various customers as there is transfer of right to use goods from the appellants to the customers. It would appear from the Supreme Court's ruling in Bharat Sanchar Nigam Limited v. Union of India STO 2006 SC 19 that anything on which sales tax is paid is goods and, therefore, service tax cannot be levied thereon(Para 7,8).

    Appeal allowed.

  • STO 2007 CESTAT 1171
  • Banking & Other Financial Services : The services rendered would fall under the category of lending which was introduced only with effect from 10-9-2004. Impugned orders demanding tax for prior period set aside.

  • STO 2007 CESTAT 621
  • Service Tax: Banking and Other Financial Services: Lending service: Scope: Lending was brought under the Service Tax net only with effect from 10-9-2004. In the present case the services rendered by the appellant would fall under the category of lending which was introduced only with effect from 10-9-2004. With effect from 10-9-2004, the appellants are liable to pay the service tax and they would be discharging their liability. Set aside the demand in both impugned orders of amounts up to 10-9-2004. The amounts which are due with effect from 10-9-2004 have to be paid by the appellants.(Para 4).

    Appeal disposed of.

  • STO 2007 CESTAT 1133
  • Stay: Banking & Other Financial Services: Prima facie, no service of financial kind was involved in the leasing of ATMs by the assessee and no transfer of information by the assessee was also involved therein. The expression “equipment leasing services” should be understood ejusdem generis with the preceding expression “financial leasing services”. Full waiver.

  • STO 2007 CESTAT 35
  • Service Tax: Banking and Other Financial Services: Demand due to change in rate of Service tax from 5% to 8% w.e.f. 14-5-2003: When the Hire Purchase contract is entered, the taxable event occurs. The instalment payments are only obligations of the hirer. The finding of the Commissioner (Appeals) that the appellant continues to provide service during the payment of installments is not correct. Therefore, the rate of Service tax will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount applying the higher rate, which came into effect from 14-5-2003, will not be applicable in respect of the contracts entered prior to that date.(Para 5).

    Appeal allowed.

  • STO 2007 CESTAT 300
  • Service Tax: Financial services: Penalty u/s 76: The short payment resulted from the appellant not being aware of the revision in the tax rate and no penalty is warranted in such cases. Reliance is also being placed on the decision of this Tribunal in the case of Ram Krishna Travels Pvt. Ltd. v. CCE, Vadodara as reported in STO 2005 CESTAT 348. It is seen that Section 76 is in regard to failure to pay tax. In the present case, there was no failure as such, but there was short payment of tax for a bona fide reason. The short payment was also clear from the return filed by the appellant. No penalty is attracted in such cases(Para 5,6).

    Appeal allowed.

  • STO 2007 CESTAT 270
  • Service Tax: Banking and other financial services by renting storage tank for gases sold by them to their customer: Penalty: Case for total waiver has been made out on the submission that the applicants herein are not covered under Section 65(12) as they are neither banking company nor financial institution including a non-banking financial company, or any other body corporate which is to be read "ejusdem generis" with the earlier clauses as held by the Tribunal in the case of Pepsico India Holdings Pvt. Ltd. v. C.C.E, Pondicherry reported in STO 2006 CESTAT 626.(Para 3).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 316
  • Service Tax: Banking and othe financial services: Scope and liability: This bench has already granted ad interim stay in the matter. On perusal of the opinion given by the retired Supreme Court judge and on the perusal of the entire transaction in terms of the agreement, the appellants are not carrying on the activity of banking and other financial services. They are only undertaking lender and borrower services. Prima facie they are not covered under the heading Banking and other financial services in terms of the cited judgments of the Bajaj Auto Finance Ltd. v. C.C.E. STO 2006 CESTAT 155. (Para 2).

    Pre-deposit waived, stay allowed.

  • STO 2007 CCEA 249
  • Service Tax: Banking and Financial Services: The Appellants are only recovering monthly user charges for the lease/right to use the Extrusion Assets; the agreement does not provide for payment of lease management fee/processing fee/documentation charges and there is no EMI involved in the said agreement with the break-up of the principal amount and the interest. In the light of the clarification given by the Board in the aforesaid circular that the lease/right to use Extrusion Assets granted to JSIL by the Appellants in lieu of monthly user charges, cannot be regarded as financial leasing of the equipment. (para 15)

  • STO 2007 CESTAT 45
  • Service Tax: Banking and other financial services: Financial leasing services including equipment leasing and hire purchase by a body corporate: Hire purchase agreement and hire purchase finance agreement: There is a fundamental difference between a hire purchase agreement and hire purchase finance agreement, namely that in the case of the former, the title to the goods remains with the hire purchase company which bails the goods to the hirer in return for periodical payments and the title to the goods is transferred to the customer/hirer only if he exercises the option to purchase the same on full payment to the hire purchase company, while in the case of the latter, the title to the goods vests in the purchaser right from the beginning and the hire purchase finance company who has only a right to seize the goods for non-payment of the loan, is not the owner of the goods. (Para 2). Hire purchase finance, in which the appellants are engaged, is different from hire purchase and that hire purchase finance is not covered under the provisions of Section 65(10) of Chapter V of the Finance Act, 1994, and accordingly set aside the impugned order(Para 4).

    Appeal allowed.

  • STO 2007 CESTAT 324
  • Service Tax: Hire Purchase Services, Leasing services under the Banking and Other Financial Services: Scope and liability: Mumbai Bench ruling rendered in the case of Bajaj Auto Finance Ltd. v. CCE, Pune - STO 2006 CESTAT 155 wherein in an identical situation, the stay application was being allowed granting waiver of pre-deposit and staying the recovery following the ratio of Sundaram Finance Ltd. v. State of Kerala & Another - (17-STC - 480). In the case of Praveen Auto Finance (P) Ltd. in appeal ST/27/2007, this Bench has granted waiver of pre-deposit based on the cited judgments. (Para 2,4).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 415
  • Service Tax: Banking and other Financial Services: Scope and liability: Appellants activity cannot be brought under the category of "Banking and other Financial Services" as they do not have any hold over the vehicle on which loans is given, as the vehicle is not in the assessee's control by way of hypothecation. In the similar case, stay order was granted in the case of Bajaj Auto Finance Ltd. v. CCE, Pune STO 2006 CESTAT 155. There is no suppression of facts and part of the demand is time barred. The original Authority had dropped the proceedings for larger period and on merits, however, the Commissioner reviewed the order-in-original on both the points which is not justified.(Para 1).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 19
  • Service Tax: Banking and financial services and Business Auxiliary Services: Scope and liability: Both the appellants had raised a specific plea before the authorities below that 'mutual fund' is also 'goods' as per the definition of SEBI. The authorities below have not recorded any finding as to why Mutual Fund cannot be regarded as 'goods' so as to be covered under Notification 13/2003-S.T. The impugned order is set aside and matter remanded to the Dy. Commissioner of Service Tax for fresh decision on the specific plea made herein.(Para 4).

    Appeal allowed by way of remand.

  • STO 2007 CESTAT 285
  • Service Tax: Document and service charges: Scope and liability: Lower authorities have confirmed the service tax in respect of "document and service charges" collected by the appellant, who is a non-banking financial institution. Appellant has not been able to show any relevant provisions in respect of his defence plea that such "document and service charges" were not leviable to duty.(Para 1).

    Partial pre-deposit ordered.

  • STO 2007 CESTAT 315
  • Service Tax: Banking and Financial Services: Scope and liability: The appellants submit that they are not engaged in leasing activity and hence, the coverage for the said period is not proper. They rely on the opinion given by the former Supreme Court Judge Shri K.S. Paripoornan. They also rely on the judgment of the Mumbai bench rendered in the case of Bajaj Auto Finance Ltd. v. CCE, Pune - STO 2006 CESTAT 155 wherein in a similar circumstance, the Mumbai Bench has granted full waiver in the matter. The appellants are entitled for an order of interim stay for recovery of the amounts till the stay application is disposed of. The Commissioner shall file his reply to the stay application and the citations relied including the opinion obtained from the former Supreme Court Judge in this matter.(Para 1,3).

    Interim stay allowed.

  • STO 2006 CESTAT 626
  • Service Tax: Banking, and other financial services"/ 'Equipment leasing service': Scope and liability: The Board's circular No. 83/1/2006-ST dated 4-7-2006 clarifies the meaning of the expression 'any other person' contained in the text of the definition of the expression "Banking and other financial services" as amended. It is clarified that this expression 'any other person' should be read ejusdem generis, with the preceding words. Before its amendment dated 10-9-2004, the expression "Banking and other financial services" was defined thus :-"The following services provided by a Banking or a financial institution including non-banking financial company or any other body corporate namely…….". By the above amendment, 'commercial concern' was also added to the above list. By a recent amendment, 'any other person' was also added to the list. It was this expression which was sought to be construed by the Board in the circular dated 4-7-2006. Accordingly, the expression 'any other person should be read ejusdem generis with the preceding words. The preceding words also include "body corporate". A corollary would be that the expression 'body corporate' should be read 'ejusdem generis' with the pre-existing expressions. If that be so, the Board's circular would stand up against the demand of Service tax raised in the impugned order in as much as, admittedly, the appellants did not come within the purview of 'non-banking financial company'. The argument put forward with reference to "equipment" is also appealing. It is also an admitted fact that Sales Tax was paid on the rental charges collected by the appellants from their distributors. It would appear from the Supreme Court's ruling in BSNL v. Union of India [STO 2006 SC 19] case that anything on which Sales Tax is paid is goods and, therefore, Service tax cannot be levied thereon, though Central Excise duty may be leviable, if the goods are found to be excisable and dutiable.(Para 3).

    Pre-deposit waived, stay allowed.

  • STO 2006 CESTAT 524
  • Service Tax: Banking and other Financial Services: Change in rate of service tax to be implemented immediately: The appellants ought to have collected the enhanced rate of 8% of service tax, notwithstanding the date of agreement with the party for collecting service tax at 5%. Their contention is that they have not collected the higher rate of service tax. This cannot be a ground to grant of waiver of pre-deposit.(Para 3).

    Pre-deposit ordered.
     

  • STO 2006 CESTAT 155
  • Stay: Prima facie the nature of the transaction between the applicants and their customers is a hire-purchase finance transaction and prima facie hire-purchase and hire-purchase financing are not synonymous. Stay granted as issue covered by Apex Court’s judgement.

  • STO 2006 CESTAT 211
  • Service Tax: Banking and other Financial Services: Refund of tax paid in excess: Initially, the Commissioner (Appeals) granted relief to the respondents. Revenue's application for stay of the Commissioner (Appeals)'s order has been dismissed by the Tribunal. In these circumstances, the Assistant Commissioner has to implement the Commissioner (Appeals)'s order. The issues before the Commissioner (Appeals) in the impugned order were only about grant of refund by way of cheques and relief in respect of the amounts rejected by the lower authority on account of time bar. Therefore, he was not expected to go into matters, which were not raised before him. Appeal by department before Tribunal is not maintainable on a new ground which was entirely new from the one taken by the department before Commissioner (Appeals). The Supreme Court, in the case of Warner Hindustan Ltd. v. Collector of Central Excise, Hyderabd - STO 1999 SC 59 held that it is not permissible for the Tribunal to consider a case laid for the first time in appeal. The refund has arisen on account of the fact that the respondents discharged Service Tax liability on the billed amount while what they received from their customers was much less. In these circumstances, there cannot be any unjust enrichment.(Para 5).

    Revenue appeal dismissed.

  • STO 2006 CCEA 899
  • Service Tax: Banking and other financial services: Scope and taxability: In the instant case, the expression "other auxiliary financial services" must be construed ejusdem generis with the specific expression "advisory" just preceding it to bring out the ambit of the latter. Applying the principle of ejusdem generis, the expression "other auxiliary financial services" would relate to other auxiliary financial services of advisory nature. Therefore, the service of collection of tax from the taxpayer and its remittance to the RBI cannot be regarded as covered under the expression "advisory and other auxiliary financial service, including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy." Thus the service provided by the Appellants is not covered under clause (vi) of section 65(10)[up to 15-8-2002]/section 65(11) [from 16-8-2002 to 13-5-2003]/section 65(12) [from 14-5-2003 onwards] of the Finance Act, 1994 as it stood during the material period i.e. 16-7-2001 to 10-9-2004.(Para 19).

    Appeal allowed.

  • STO 2006 CESTAT 765
  • Service Tax: Bank and Other Financial Services: Scope and liability: There is a violation of principles of natural justice, inasmuch as the appellants have not been heard before the dismissal of the appeal. The appellants have produced all the documents now and undertakes to produce the same before the Commissioner (A) in de novo proceedings. Therefore, the impugned order is set aside and matter remanded to Commissioner (A) (Para 4).
    Appeal allowed by way of remand.

  • STO 2005 CESTAT 202
  • Service Tax: Banking and other financial services: Waiver of pre-deposit: They were collecting charges as processing fees for working capital limits. As the present charges pertaining to processing fees for working capital limit is not mentioned in Rule 8 enumeration. Prima facie, the appellants have made out a strong case in their favour. (Para 3).

    Pre-deposit waived.

  • STO 2005 AP 123
  • Banking Services : Suffice to state that the petitioner cannot be held to be a "non-banking financial company" solely on the basis of the certificate of registration issued by the Reserve Bank of India. It is only if, on the basis of material on record, it is established that in addition to the Certificate of Registration, the principal business of the petitioner, during the relevant period, was receipt of deposits or lending of money, that it would come within the definition of a "non-banking financial company", rendering it liable for payment of service tax.

     
     

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