https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=757445 https://www.taxtmi.com/caselaws?id=757445 Recovery of service tax - service tax short/not-paid due to non-incorporation of entire amount of income from commission, Brokerage, Processing Fees, Locker Rent, etc. - non-payment of service tax on Finance Leasing/Hire Purchase income. 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 - HELD THAT:- 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 of the relevant period. It is observed that the ld. adjudicating authority has not given any finding in the impugned order on the above submissions made by the appellant. Thus, it is found that the issue is to be referred back to the adjudicating authority to examine the claim of excess payment made by the appellant as reflected in the table reproduced. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. Rs.98,33,759/- has been confirmed towards non-payment of service tax on Finance Leasing/Hire Purchase income - HELD THAT:- This demand has been confirmed under the category of the taxable service Finance Leasing/Hire Purchase u/s.65(12)(a)(i) of the Finance Act, 1994.However, the appellant claimed that this income pertains to Interest on Loan which is exempted from payment of service tax. It is observed that the contract is for lending of money for acquiring any asset and not for lease of any specific asset, their use and occupation. Terms of payment is calculated to cover the money borrowed and interest thereon and not for to cover full cost of asset together with interest charges as the money borrowed may or may not cover the full cost of asset. The borrower is entitled and becomes owner of the asset immediately on purchase of the asset with the help of borrowed money and he need not wait till the lease period comes to an end. The borrower purchases the assets with the help of the borrowed money and ownership and title of the asset immediately passes on to the borrower, and also remains with the borrower at all times and it never lies with the lender, and the lender has no control over the said asset, and the borrower has not to wait till payment of last instalment to become the owner of the assets - the contract entered in this case is meant for lending of money and not for leasing or hire purchase - the demand of service tax confirmed in the impugned order on this count is not sustainable and hence the same is set aside. Disallowance of CENVAT Credit - HELD THAT:- The appellant claims that though CENVAT Credit of Rs.22,60,357/- for the year 2010-11 and of Rs.17,48,644/- for the year 2011-12 were recorded in the books of account, those CENVAT amounts were never availed and utilized by them and as such, the appellant had not shown the same in ST-3 return for the respective period - it is observed 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. Disallowance of CENVAT credit of Rs.8,21,910/- - HELD THAT:- It is observed 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 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. The service tax liability, including Education Cess and Higher Education Cess, of Rs.85,263/-, has been paid by the appellant by utilizing the aforesaid CENVAT Credit of Rs.8,21,910/-. The appellant claimed that they have not carried forward the balance credit. This fact also needs to be verified. 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. However, the appellant is liable to pay back credit of Rs.85,263/- which has been wrongly utilized by them. Penalty - HELD THAT:- It is observed that they have regularly paid their service tax liability as per books of accounts and as per the Provisions of Finance Act, 1994, as amended. None of the conditions precedent for imposing penalty under section 78 of the Finance Act, 1994 read with Rule 15 of CENVAT Credit Rules, 2004 as amended, are applicable in the case of the appellant. Accordingly, no penalty is imposable on the appellant. Hence, we set aside the penalty of Rs.1,51,50,155/- imposed on the appellant in the impugned order. Appeal disposed off. Case-Laws Service Tax Fri, 23 Aug 2024 00:00:00 +0530