TaxTMI 
TaxTMI 
2013 (10) TMI 1449
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....ut whole of their factory which included plant, machinery and other assets including land, etc., to certain other companies who are also in the field of sugar manufacture. The lease was for a specified period and the lease rent was also specified on per annum basis. The Revenue issued a show cause notice claiming that the said activities as services of leasing fall under 'banking and other financial services' as per Section 65(12) of the Finance Act, 1994. The cases were adjudicated by the original authority who confirmed the demand. On appeals filed by the present respondents, the appeals were allowed by the Commissioner (Appeals). Against the said order of the Commissioner (Appeals), the Revenue is before us. 2. The main grounds o....
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....ar situation was examined by this Tribunal in the case of CCE, Vadodara-I v. GE India Industries (P) Ltd. reported in 2008-TIOL-1444-CESTAT-AHM = 2008 (12) S.T.R. 609 (Tri.-Ahmd.). In the said case, certain extrusion machines were leased by M/s. GE India Industries (P) Ltd. to M/s. Jain Irrigation, Jalgaon and they were receiving certain amount as user charges and the Revenue tried to cover the said activity under 'banking and other financial services' In this context, the Tribunal observed as under :- "3. The relevant extracts of the definition of Banking and Financial Service under Section 65 of the Finance Act, 1994 are given below : Section 65(2) "banking and financial service" means - (a) the following services pr....
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....ts on lease is transferred to lessee by the end of the lease term and this option is created at the inception of the lease itself. In the instant case, the agreement is only for the period of 35 months during which a monthly user charge is required to be paid and agreement does not provide for transfer of the assets at the end of the term. Further from the agreement it is also seen that all risks and rewards incidental to the ownership have also not been transferred and ownership of the asset and effective control of the assets remain with the applicant in this case. Further, lease is for a short period of 35 months extendable to another period of 2 years and has no relation to the economic life of the asset which is invariably a considerat....
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.... account of the lessor/hire purchase service provider. The interest/finance charges is the revenue or income and is credited to the revenue account. Such interest or finance charges together with the lease management fee/processing fee/documentation charges is the consideration for the service rendered and therefore, they constitute the value of taxable service and Service Tax is payable on this value. Accordingly, it is clarified that Service Tax in the case of financial leasing including equipment leasing and hire-purchase will be leviable only on the lease management fee/processing fee/documentation charges (recovered at the time of entering into the agreement) and on the finance/interest charges (recovered in equated monthly installment....
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....machinery by the appellants are not financial leasing services following the decision of the Ahmedabad Bench of the Tribunal in the case of CCE, Vadodara v. G.E. India Industries Pvt. Ltd. reported in 2008 (12) S.T.R. 609 (Tri.-Ahmd.) as well as the decision of the learned Commissioner (Appeals) in appellant's own case No. Appl/JPR-II/ST/CH/140/X/2007/ 1152, dated 3-12-2008. Therefore, he prays that appeal may be allowed. 4. Learned DR Shri Vijay Kumar submits that the leasing of the equipment and factory shall be falling under the category of Banking and other Financial Services for which the Board has already issued clarification. According to the Board's clarification in letter F. No. B.II/1/2000-TRU, dated 9-7-2001 not only Bank....