Tribunal rules in favor of appellants on service tax issue for ATM leasing services.

The Tribunal ruled in favor of the appellants in a case concerning the interpretation of "equipment leasing services" under section 65(11) of the Finance Act 1994 for the levy of service tax on ATM leasing services. The Commissioner's demand for over 59 lakhs for service tax, education cess, interest, and penalties related to ATM leasing services provided to banks was contested by the appellants. The Tribunal agreed with the appellants that leasing ATMs to banks did not constitute "banking and other financial services" as argued by the Revenue, leading to a waiver of pre-deposit and a stay of recovery for the tax, cess, and penalties.

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Issues involved: Interpretation of the term "equipment leasing services" u/s 65(11) of the Finance Act 1994 for the levy of service tax on ATM leasing services.

Summary:
1. The Commissioner demanded over &8377; 59 lakhs from the appellants for service tax, education cess, interest, and penalties related to ATM leasing services provided to banks between 1-4-2005 to 15-6-2005, categorized as "Banking and other Financial Services" u/s 65(11) of the Finance Act 1994.

2. The appellants contended that ATM services became taxable only from 1-5-2006 with the insertion of clause 9(a) & (b) u/s 65. The Revenue argued that leasing ATMs to banks falls under "financial leasing services" u/s 65(11). The appellants argued that there was no financial element in the leasing activity, hence not classified as "banking and other financial services."

3. The Tribunal found merit in the appellants' arguments, stating that no financial service was involved in the ATM leasing, and the term "equipment leasing services" should be construed ejusdem generis with "financial leasing services."

4. Consequently, the Tribunal ordered a waiver of pre-deposit and a stay of recovery for the tax, cess, and penalties involved in the case.

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