TaxTMI 
TaxTMI 
2021 (3) TMI 676
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive charges on registration of transfer of hire purchase lease. 2. Department alleged that activity of collection of above said charges is covered under definition of Banking and other Financial Services as mentioned under Section 65 (12) of the Finance Act, 1994. 3. In view of these observations / allegations, Department has served the appellants with following three Show Cause Notices for the respective period and the quantum of demand:- Sl. No. SCN No. Period of Demand Service Tax Demand (Rs.) Penalties under Section 1. V(H) Adj.I/ST/155/2011/ 1844 dated 21.10.2011 04/2006 to 03/2011 14,21,85,210/- Under section 76,77 & 78 2. V(H) Adj.I/ST/14/ 2013/ 4078 dated 19.03.2013 04/2011 to 03/2012 5,87,42,122/- Under section 76,77 & 78 3. V(h)Adj. I/ST/360/ 2013/ 2060 dated 30.09.2013 04/2012 to 03/2013 8,39,00,865/- Under section 77 & 78 Total 28,48,28,197/- 4. The appellant replied these notices vide their letter dated 01.03.2012, 07.05.2013 & 06.12.2013 respectively. Three of the notices have been adjudicated vide the Order-in-Original No. JOD-EXCUS- 000- COM - 0069 to 0071-16-17 dated 16.02.2017 thereby confirming the demand ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso cannot be covered as taxable. It, is accordingly, submitted that all the amounts, as alleged to be leviable to tax that is ancillary service charges, hire purchase deposit and interest on sale are not taxable, as these amounts are not received in relation to any taxable service rendered. 6.3 Finally, it is submitted that appellant is a Government Undertaking, suppression of facts cannot be alleged against such bodies. Otherwise also, Department has always been co-operated and all requisite information has always been provided by the appellant to the Department. There arises no question of any suppression or concealment of facts that too, with an intent to evade payment of tax. Once that is the fact, the penalties under section 77 and 78 also cannot be levied. The appellant rather is entitled for the relief given under Section 80 being a reasonable cause present. With these submissions, and that the adjudicating authority below has failed to take into consideration the submissions but has solely relied upon the facts that appellant is a body corporate, the demand has wrongly been confirmed. 6.4 The learned Counsel has relied upon the following case laws:- 1 CCE, Pune vs. Kes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces" means - (a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or [commercial concern]*, namely :- (i) financial leasing services including equipment leasing and hire-purchase; Explanation.-For the purposes of this item, "financial leasing" means a lease transaction where- (i) contract for lease is entered into between parties for leasing of a specific asset; (ii) such contract is for use and occupation of the asset by the lessee; (iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and (iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment; (ii) Omitted (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing; (v) asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services , (vi) advisory and other auxiliary financial service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Central Government may, by Notification in the official Gazette, specify in this behalf. 11. It clarifies that the body corporate, which fall in the exclusion clause of the above definition are not relevant for the purpose of Section 65 (12), which defines Banking and other Financial Services. Clause (c) of the above definition excludes such body corporate from the scope of Section 65 (12) of the Finance Act which cannot be defined as company and which are the creature of Government. The appellant is, apparently, constituted under Rajasthan Housing Board Act, 1970. No doubt, Section 4 (2) of the said Act describes 'RHB' as a body corporate but this body corporate is definitely not constituted under the Companies Act but by Rajasthan Government to have perpetual succession and a common seal with power to acquire hold and dispose of property both moveable and immovable and to enter into contracts and may by its corporate name sue and be sued and do all things and acts necessary for the purpose of Rajasthan Housing Board Act. 12. Apparently, the purpose of the Act is to provide for measures to be taken to deal with and satisfy the need of housing accommodation in the State of Ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 65A discusses about classification of taxable services to be determined according to the terms of sub-clauses of Clause (105) of Section 65. Sub-section (2) thereof reads as follows:- '(2) When for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows :- (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; (c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration.' 16. The said provision is applicable to the demand of Show Cause Notice dated 11.10.2011 and 19.03.2013. 17. According to this provision and the above discussion, it stands clear that si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tial character to the service has to be considered. 21. The Tribunal, Mumbai had followed an earlier decision of Karnataka High Court in the case of CCE vs. N.K. Agencies Pvt. Ltd. reported in 2010 (20) STR 176, Bangalore Tribunal also in the case of SPL Developers Pvt. Ltd. vs. CST, Bangalore reported in 2015 (39) STR 455 has held that classification has to be on analysis of characteristic of service, analysed in terms of Provisions of Finance Act considered in the light of guidance in Section 65 A of Finance Act, 1994 and not as per the Adjudicating Authority or assessee. 22. Now coming to the other income as that of interest as alleged in the impugned show cause notices, we take recourse of Service Tax (Determination of Value) Rules, 2006, though applicable for the period w.e.f. 18.04.2006 to 01.07.2012., we observe that as per Rule 6 (2) thereof the value of taxable service has not to include interest on loans and on delayed payments of any consideration for provision of services or sale of property whether movable or immovable. The hire purchase deposits for the property which cannot be defined as goods are also out of the scope of taxable value as far as the interest thereu....