TaxTMI 
TaxTMI 
2007 (9) TMI 33
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....ssioning, Repairs and Maintenance, Technical Testing and Analysis, Franchise Service. 2. During the scrutiny of their records, the CERA auditors observed that the appellants are also engaged in the business of Leasing and Hire Purchase of some equipments from 16-7-2001 onwards and have received lease receipts / financial charges for providing these services. This service appeared to be covered as taxable service under the category of '"Banking and other Financial Services" as per Section 65(12) of Chapter V of the Finance Act, 1994 (as amended) w.e.f. 16-7-2001. Further Ministry of Finance vide its circular No. BII/1/2001- TRU dated 9-7-2001 has clarified that in the case of hire-purchase agreement, interest or finance charges togeth....
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....unt of management fee, processing fees or documentation charges, etc., the way professional finance institutes charge, but interest was charged on unpaid amount of credit. Their contention is that this interest cannot be equated with the interest that is generally charged from the buyers by the professional financial institutes. Therefore, such interest amount is not in terms of the services rendered by them. They refer to clause (viii) of Explanation 1 to Section 67 as inserted by Finance (No. 2) Act, 2004 w.e.f. 10-9-2004, according to which the amount of interest collected is outside the ambit of the service tax. They pointed out that the Explanation has removed the lacuna that existed in the earlier provisions and hence it is clarificat....
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....trial uses. 7. The lower authorities confirmed the service tax demand of Rs. 1,35,189/- for the period from 16-8-2002 to 31-3-2004 on the ground that as per Section 65(105)(zm) of the Finance Act, 1994 'any service provided to customer by any other body corporate' in relation to 'Banking and other Financial Services' is a taxable service w.e.f. 16-8-2002. '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. Bull /2001-TRU date....
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....; 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.' In our view, the insertion of the explanation has removed the anomaly that existed earlier and it should be treated as clarificatory in nature i.e., effective from 16-8-2002. In that view of the matter, the Service tax demand confirmed for the period from 16-8-2002 to 31-3-2004 is not sustainable. 8. There is another angle to the case. The appellants have furnished sample copies of the invoices relevant to the period in question to show that the sales t....