2017 (11) TMI 658

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....nking and Other Financial Services is lending of loan to the various customer for purchase of vehicle. The loan amount is repayable by the customer in installment to the appellant as per the schedule in terms of the agreement. In case of failure to repay the loan amount the vehicle which is hypothecated to the appellant are seized through some agency on behalf of the appellant. As and when the customer approaches the appellant for release of the repossessed vehicle, the appellant recovered the seizing charges from the individual customer, which they have incurred as a payment made to the recovery agents. The appellant availed the cenvat credit in respect of service tax paid relating to the activity of seizing charges paid by them to their r....

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....y the loan, the seizure of the vehicle which is a security against the loan is one of the input service which is used in relation to lending of money, therefore it is directly an input service and credit is admissible. He alternately submits that since the seizing activity of the vehicle and release of repossessed vehicle is part of the security service, the vehicle which is hypothecated is a security against the loan provided by the appellant therefore the service of taking possession of the vehicle by the recovery agent is a service related to security of their lended money . The service of security is included in the inclusion part of the definition of input service. For this reason also the appellant is entitled for the cenvat credit. W....

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....for lending of money to the borrower therefore the same is not input service, hence the credit is not admissible. He further submits that the so called input service or repossession of vehicles burden to the post disbursement of loan and it is nothing to do with the output service which is lending. He further submits that there is no service tax either on lending or on the interest amount what is levied to service tax is only processing fees charged by the appellant for processing of loan. That being the case there is no nexus of the input service and service tax paid on recovery charges with that on output service namely lending therefore the credit is not admissible. 4. We have carefully considered the submissions made by both sides. W....

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....ales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" From the above definition it can be seen that any service used for providing output service is an input service. As discussed above, the service of taking repossession of the vehicle which is an activity in relation to recovery of the loan is used for overall service of lending. Therefore as per the main part of the definition, the service of recovery ag....