TaxTMI 
TaxTMI 
2018 (12) TMI 783
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.... of the appellant could procure fuel from the Petroleum Companies by using the card. Appellant had a prior arrangement with the fuel companies. These Fleet Cards were presented by the customers, at the point of payment, to settle their fuel bill, thereby removing the need for cash. Payments were to be made by the consumers to the Oil Companies. 4. Gist of the show cause notice reads as under:- "6. On examination of the operations of SFL, it appears that the fleet cards are presented at the point of payment at fueling stations to settle the fuel bill, thereby removing the need for cash, and in the process increasing security. In other words, the fleet card owner can make purchase of fuel using the fleet card, without the need to pay cash immediately. Thus, the fleet card's function is more akin to function of extending credit, as fleet cards offer credit limits like regular credit cards. 7. Further, it appears that, extending credit facility under Fleet card is not the same, as extending loans or advances, in as much as "loans or advances" are meant to signify amounts which are contractually negotiated as such (loans or advances). The financial charges and a....
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....eceived from the above activity. 6. Replies were filed to various show cause notice. Basis of the reply which is more or less common and the same reads as under:- ".The fleet card issued under the scheme is different from an ordinary credit card or petro card issued by banks and oil companies, inasmuch as the same is vehicle specific, usable only in authorised petrol outlets and only for purchase of fuel or lubricants, no cash withdrawals are possible and bills are settled by the taxpayer to oil companies. Credit cards have wider scope of usage and less restrictions. . The fleet cards are issued on execution of loan/hypothecation agreement and the vehicle is taken as collateral. However, credit cards do not have these obligations. Since the cards are issued only on the execution of loan agreement, these are in the nature of loans and the finance charges collected are in the form of interest on loans, which are exempt from service tax. They have booked the income from fleet card scheme only under hypothecation loan income under income from operations in their books. No monetary benefit is offered to them nor any monetary commitment charged on t....
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....ollected from the cardholder. All these activities are obviously in the nature of services rendered in relation to settlement of amounts transacted through fleet card and the amounts charged by SFL on the card holders are clearly in nature of compensation of such services rendered. Consequently, I hold that the impugned activity falls squarely within the ambit of clause (iii) of Section 65 (33a) of the Finance Act, 1994. 20. Further, I find that the argument of the taxpayer that the fleet card transaction is in the nature of loan and the finance charges collected by them are in the nature of interest on loans extended by them and hence not subject to tax, cannot be accepted. Loan is an arrangement wherein the lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point in time. Usually, there is a predetermined time for repaying a loan. However, in the fleet card system, the same credit limit is extended every fortnight and there is no guarantee that the credit facility will be utilised by the card holder. In other words it is quite possible that....
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.... or not. 10. The Customs, Excise and Service Tax Appellate Tribunal, after considering the entire issue held:- a. on examining the basic materials and the conditions for issue of "Fleet Card" in appellant's own website as well oil Company's website. Finding of the original authority that "Fleet cards" operates similar to credit card, authorities to safely to credit card does not require any interference. b. The benefits given under the Fleet Card, cannot be treated on par with a loan transaction. c. Advance charges and additional finance charge collected by the appellant, forms part of the taxable value or a taxable service of BOFS/Credit Card Services. Appellant/assessee is liable to pay service tax on the income shown as "finance charges" and the "additional finance charge". 11. It is this order under challenge in the present set of appeals. 12. Department has raised a preliminary objection that the instant issue raised in the appeal is on the classification of the service and its taxability and this issue could be agitated only before the Hon'ble Supreme Court and therefore the appeals are not maintainable. 13. The appeals was f....
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....o with the customer and backed by the vehicle as collateral security as credit card services, when the fleet card was not issued bye th appellant but only by the Oil Companies? (ii). Whether the Tribunal was right in holding that finance charge and additional finance charges on fleet cards does not amount to interest on loan? (iii). Whether the financing of fleet card payments, cannot be treated as a loan merely because the amounts are not disbursed at one time or in instalments, but allowed as a credit limit for fixed periods? (iv). Whether the Tribunal was right in not deleting the penalty under Section 76 having given a finding that there was no suppression of facts and deleting the demand for the extended period?" 22. Undoubtedly, the issue in this case is, as to whether fleet cards have been provided is a part of loan transaction or is it a credit card facility. 23. Section 35 G, Section 35 L of the Central Excise Act and Section 83 of the Finance Act, 1944 reads as hereunder:- Section 35G. : Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after ....
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.... been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges. (8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. 1. Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this Section. Section 35L : Appeal to the Supreme Court - (1) An appeal shall lie to the Supreme Court from - (a) any judgment of the High Court delivered - (i) in an appeal made under Section 35G; or (ii) on a reference made under Section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under Section ....
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....relating, among other things, to the determination of any question having a relation to the rate, of duty of customs or to the value of goods for purposes of assessment'. 9. The importance of the present appeal lies not so much in deciding which appeals can be heard by a member of CEGAT sitting singly and which by a Special Bench thereof as in determining where a reference can be made by CEGAT to the High Court and in which cases an appeal against an order of CEGAT can be filed directly before the Supreme Court. Where an appeal lies to the Supreme Court, the necessity of the reference on a question of law to the High Court is obviated. An appeal to this Court is provided where, as aforementioned, the questions in issue, relating to the rates of duty or the value of goods for the purposes of assessment, have relevance not only for the parties there concerned but for other importers as well. 10. Section 129-D deals with the powers of the Central Board of Excise and Customs and the Collector of Customs to call for and examine the record of any proceedings before authorities subordinate thereto and examine the legality or propriety thereof and also to direct such ....
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....n matters that the said Act provides for. Although this Explanation expressly confines the definition of the said expression to Sub-section 5 of Section 129-D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning we have, given to the said expression above. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods. ....
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....notification; and whether the value of goods for the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. Determination of rate of duty in relation to any goods include determination of a question whether any goods or not, whether the process if any undertaken in the service centre amounts to manufacture or not, and if the goods prodced during that process are excisable goods or not would fall within meaning of the expression 'determination of the rate of duty of excise or the value of the goods for the purposes of assessment of duty' used i....
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.... to place. In order to bringing uniformity in the levy of excise duty throughout the country and consequently to see that the country's finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Apex Court. Therefore, we see a duty policy underlining this bifurcation of the jurisdiction between the Apex Court and the High Courts. All other matters other than what is set out above, which relates to the individual manufacturers and all disputes based on assessment orders which have attained finality, such as the benefits to which they are entitled to, refunds, duty drawbacks, rebates, etc., which relate to a particular manufacturer falls within the jurisdiction of the High Courts." 27. Judgment of the Karnataka High Court stated supra, has been quoted with approval by a Hon'ble Division Bench of this High Court in THEJO ENGINEERING SERVICES PVT LTD Vs. COMMISSIONER OF CUSTOMS EXCISE, CHENNAI - II {2017 (349) ELT - 113}, wherein the above mentioned four paragraphs have been quoted. "11. Keeping the above principles enunciated by the Supreme Court as also the disputes that fall within the jurisdiction of the High Court, as cu....