TaxTMI 
TaxTMI 
2019 (1) TMI 723
X X X X Extracts X X X X
X X X X Extracts X X X X
....n received from Insurance Company for canvassing their policies; iii) service tax under business auxiliary services, on the commission which they received from various vendors of the consumer durables, etc. Briefly, the business of the appellant is that they help various government employees procure consumer durables and two wheelers from vendors. These products/goods are made available to the employees on hire purchase basis. Since they are helping vendors in selling their goods, they get a commission from them. The appellants are also engaged in organizing insurance policies to engineering students and when the students by policies, the appellants get a commission from the insurance company. 3. With respect to the first item of demand, namely, income from hire purchase activities the appellant argues that in the first round of litigation, it was held by this bench that their activities were hire purchase finance activities and not hire purchase activities and hence were not leviable to service tax. The Learned Counsel for the appellant argues that in the denovo adjudication order, the Commissioner had gone beyond the mandate given to him and has also examined the nature of thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e distinction between the hire purchase and hire purchase finance as held by the Tribunal in the case of Bajaj Auto Finance Ltd., has reached finality and would apply in this case. He draws the attention of the bench to following observation of the Tribunal in this order. '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 scrutiny of the agreement entered into between the hirer and the appellants that the hirer identifies the vehicle that he wishes to purchase from the manufacturer/dealer thereof, makes a part payment to the seller of the vehicle, applies to the appellants for financing the balance, and once the financing is sanctioned, the hirer enters into an agreement with the appellants and provides as security, right of repossession of the vehicle to the appellants in the event of his (hirer) default in payment of instalments to the appellants. The hire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rce and remit the same to APTPC within the due dates as indicated in the application ii) that restrictions shall be imposed with regard to the applicants age, left over service, net pay drawn etc., iii) the applicant has to bring one/two guarantors iv) the hirer and his guarantors shall enter into an agreement with APTPC at the time of issue of the consumer durable v) the ownership certificate will be issued by APTPC to the hirer after the hirer pays all the installments and after the hirer pays a transfer fee of rupee one for transfer of right in the consumer durable in his favour. 7. He would submit from the above, as per the ratio of the judgement in the case of Bajaj Auto Finance Ltd., (supra) the services of the appellants squarely falls under the category of hire purchase services provided and not hire purchase finance. He would submit that these facts were incorrectly placed before the bench when the initial order was passed for denovo adjudication. This would not constrain the tribunal from considering this factual matter at this stage and the ratio of the Bajaj Auto Finance Ltd., (supra) case applies. On the related argument that interest on the money earned in hire p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on hire-purchase [See clause (c)] which expression is also there in the second limb of the said article. 37. Applying the above decisions to the present case, on examination of the impugned legislation in its entirety, we are of the view that the impugned levy relates to or is with respect to the particular topic of "banking and other financial services" which includes within it one of the several enumerated services, viz., financial leasing services. These include long time financing by banks and other financial institutions (including NBFCs). These are services rendered to their customers which comes within the meaning of the expression "taxable services" as defined in Section 65(105)(zm). The taxable event under the impugned law is the rendition of service. The impugned tax is not on material or sale. It is on activity/service rendered by the service provider to its customer. Equipment Leasing/Hire- Purchase finance are long term financing activities undertaken as their business by NBFCs. As far as the taxable value in case of financial leasing including equipment leasing and hire-purchase is concerned, the amount received as principal is not the consideration for services ren....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... financial services' and is chargeable to service tax. 9. On the third issue of service tax on the commission received from various vendors, he would submit that the exemption from payment of service tax under Notification No. 13/2003, as commission agents was valid only upto 09.07.2004 and thereafter they were liable to pay service tax. He would also argue that the interest on the service tax amounts as well as the penalties may be upheld. 10. We have considered the arguments on both sides and perused the records. Insofar as the first element of service tax on the hire purchase is concerned, the issue is reached finality at the hands of the Hon'ble Apex Court in the case of Bajaj Auto Finance Ltd., (supra) and the difference between hire purchase and hire purchase finance is based on whether the ownership of the goods gets transferred to the consumer at the beginning or at the hand of the hire period after all the installments are paid. The former is hire purchase finance and latter is hire purchase. In this case as it is evident from the arrangement with the government employees and their offices, the ownership of the goods lies with the appellants and gets transferred to the e....