TaxTMI 
TaxTMI 
2007 (5) TMI 28
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....covers "banking and other financial services" which inter alia means "financial leasing services including equipment leasing and hire purchase by a body corporate", and penalty of equal amount under Section 78, in addition to Rs. 200/- per day during which failure to pay tax continues, and penalty of Rs. 1,000/-. The period of demand is 16-7-2001 to 31-3-2005. 2. The case of the department is that there is no difference between hire purchase which is admittedly covered under Section 65(10), and hire purchase finance, as in both cases, the hirer enters into agreement with person who provides financial services to the hirer and in lie of such services, the hirer pays certain amount as finance charges/hire purchase charges. We find on scrutin....
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....n the light of the apex court's decision in Sundaram Finance Ltd. v. State of Kerala & another (1966) 17 STC 489 in which the distinction between hire purchase and hire purchase financing has been brought out. Paragraphs 10 and 11 of the judgment which are relevant in this regard, are re produced below :- "10. A hire-purchase agreement is normally one under which an owner hires goods to another party called the hirer and further agrees that the hirer shall have an option to purchase the chattel when he has paid a certain sum, or when the hire-rental payments have reached the hire-purchase price stipulated in the agreement. But, there are variations when a financier is interposed between the owner of the goods and the customer. The agre....
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....f the documents. An owner of goods who purports absolutely to convey or acknowledges to have conveyed goods and subsequently purports to hire them under a hire-purchase agreement is not estopped from proving that the real bargain was a loan on the security of the for goods. If there is a bona fide and completed sale of goods, evidenced by documents, anterior to and independent of a subsequent and distinct hiring to the vendor, the transaction may not be regarded as a loan transaction of even though the reason for which it was entered into was to raise money. If he the real transaction is a loan of money secured by a right of seizure of the goods the property ostensibly passes under the documents embodying the transaction, but subject to the....