TaxTMI 
TaxTMI 
2014 (8) TMI 710
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.... M.P. The appellant gave the factory premises along with entire plant and machinery on lease to M/s. Montage Enterprises Pvt. Ltd., Malanpur in terms of an agreement with them. During the period from 2004-05 to May, 2007, they received total lease rent of Rs. 44,65,00,000/-. The department was of the view that this activity of the appellant is taxable as "Banking and other Financial Services" under Section 65(105)(zzm) read with Section 65(12) of the Finance Act, 1994. According to the department, this activity is covered by Clause (a) (i) of Section 65(12), which covers "Financial Leasing Services including Equipment Leasing and Hire Purchase by a Body Corporate". On this basis, a show cause notice dated 14.09.2007 was issued to the appell....
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....nance involved in it, and that activity of the appellant is, in fact, renting of immovable property which became taxable w.e.f. 1.6.2007 under Section 65(zm) and hence, during the period prior to 1.6.2007, the same would not be taxable. He also cited the judgement of the Tribunal in the case of Banswara Syntex Vs. CCE, Jaipur reported in 2010 (18) STR 68 (Tribunal) wherein it was held that leasing of land, building and plant and machinery under a lease agreement is not financial leasing and is not taxable under Section 65(105)(zm) read with Section 65(12) as "Banking and Financial Service". He also cited the judgement of the Tribunal in the case of CCE, Vadodara-I Vs. G.E. India Industries Pvt. Ltd. reported in 2008 (12) STR 609 (Tribunal-A....
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....ting of their plant and machinery to M/s. Montage Enterprises Pvt. Ltd . for a period of 11 months on a licence fee of Rs. 40 Lakhs per month. Thereafter, this licence agreement was renewed on expiry of the licence period. The department is of the view that this activity of the appellant is Financial Lease covered by the definition of "Banking and Financial Service" as given in Section 65(12) of the Finance Act, 1994 and hence, the lease amount/licence fee received by the appellant would attract service tax under Section 65(105)(zm) read with Section 65(12) of the Finance Act, 1994. 7. Section 65(105)(zm) covers the services provided to any person by a banking company including a non-banking financial company or any other body corporate ....
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....ICAI, a lease is classified as a financial lease, if there is an option for transfer of asset to the lessee at the end of the lease period. Besides this, in a financial lease, lease period is almost the entire economic life of the asset. Though during the period of dispute, the term, "Financial Lease" was not defined in Section 65(12) of the Finance Act, as held by the Tribunal in the case of Commissioner of ST Vs. Lufthansa Technik Service India Pvt. Ltd. reported in 2013 (31) ST 730 (Tribunal-Delhi) in absence of the definition of this term, the same must be interpreted in the sense it is understood in the common parlance or trade parlance and accordingly, this term is to be understood according to its meaning in the ICAI Accounting Stand....