TaxTMI 
TaxTMI 
2022 (2) TMI 408
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....ed in issuing notices to their customers. In addition, the appellants also provide the service of air / rail / bus travel agents and render services in booking the tickets. The appellants have discharged service tax on the same. The appellants who are working as representative of M/s. Wall Street Finance Ltd., Bombay for disbursement of money on behalf of M/s. Western Union Financial Services. Revenue alleged that part of the interest collected by the appellants, over and above 18% of interest, at times referred to as incidental charges are leviable to service tax; token charges and postage charges recovered are also chargeable to service tax; the charges recovered for disbursement of money as representative of M/s. Wall Street Financial Ltd., Bombay is also chargeable to service tax. Accordingly, show-cause notices covering various period have been issued and confirmed against the appellants. Hence various appeals have been filed as detailed below: SL No Appeal No OIO/OIA No & Date Period Total ST demand 1 ST/21818/2016-SM COC-EXCUS-000-APP-255-16- 17 dated 09.09.2016 Sep-04 to Sep-08 4104117 2 ST/20751/2015-DB COC-EXCUS-000-COM-43, 44&nbs....
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....osable, in the facts and circumstances of the case. 3. On the issue of demand of service tax on the interest charged on gold loan in excess of 18%, the learned counsel submits that the appellants formulate gold loan schemes from time to time and an advisory is issued to the Branches to collect the penal rate of interest. However, as per the direction of the Government of Kerala no money lender shall charge interest on any loan at the rate exceeding 2% over and above the maximum rate of interest charged by the commercial banks; in this backdrop, Head Office advised the Branches that the interest above 18% is to be accounted as incidental charges. The decision of the State Government has been challenged before the Hon'ble High Court of Kerala which supported the Government of Kerala; a batch of Special Leave Petitions have been filed by the appellants and others before the Hon'ble Supreme Court, which are still pending. Head Office, vide Circular No.19/2007-08 dated 31.3.2008 advised the Branches that entire risk interest was to be shown as 'interest' only and only the token charges to be shown as incidental charges. The learned counsel for the appellant submits that it is a....
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....respect of appeal No.ST/21605/2018) rejecting the contention of the show-cause notice held that rate of interest or legality of charging of interest in excess of normal interest does not fall within the purview of the service tax provisions; the functioning of the NBFCs is regulated by RBI; the entire interest charged on the gold loans is not taxable. He further submits that CBEC vide Circular No.80/10/2004-ST dated 17.9.2004 clarified as follows: "19.2 The 'interest on loans' has been specifically excluded by way of amendment to the provisions relating to valuation (S.67). All such interests that are in the nature of interests on loans would thus remain excluded from taxable value. Further, clarifications on these issues would be issued shortly." 3.3 He further relies upon the ratio of the judgments in Eicher Motors Ltd Vs CCE, Indore: 2016 (41) STR 721 (Tri.-Del) and Jaylaxmi Credit Company Ltd Vs CCE Daman: 2015 (39) S.T.R. 164 (Tri. - Ahmd). 4. Coming to the 'token charges' collected for the issue of identity card/identification tokens to the customers, learned counsel for the appellant submits that the token is unique to each customer and contains th....
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....the benefit of these services accrue outside India, the service amounts to export of service. He relies upon the following cases: (i) Wall Street Finance Ltd vs. CST, Mumbai: 2015 (37) STR 642 (T) (ii) CCE Chandigarh vs. Ashu Forex Pvt. Ltd: 2014 (35) STR 776 (Tri - Del) (iii) Muthoot Finance Corporation Limited vs. CCE, Visakhapatnam: 2010 (17) STR 303 (Tri Bang) (iv) Paul Merchant Limited vs. CCE, Chandigarh: 2013 (29) STR 257 (Tri- Delhi) (v) Kerala State Financial Enterprises Ltd Vs CCE, Calicut: (24) STR 585 (T-Bang) 5.1 He further submits that Government of India vide Notification No.19/2015-ST dated 14.10.2015 under Section 11C of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 clarified that the service tax payable on the services provided by an Indian Bank or other entity (NBFC) acting as an agent to the MTSO in relation to remittance of foreign currency from outside India to India for the period from 1.7.2012 to 13.10.2014 shall not be required to be paid. 6. Arguing on the issue of limitation and penalties, the learned counsel for the appellant submits that t....
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....duced before the adjudicating authority. 7.2 Learned AR, for the department, submits on the issue of commission earned as agent of M/s. Wall Street Finance Ltd. that Western Union network and M/s. Wall Street Finance Ltd. are different companies; the appellant entered into contract with M/s. Wall Street Finance Ltd. for the remittance of money to desired individuals and M/s. Wall Street Finance Ltd. pays commission to the appellant. There is no contractual obligation between M/s. Western Union network and the appellant and they are not party to the contract between M/s. Wall Street Finance Ltd. and M/s. Western Union; the appellant has never received any renumeration for this service in foreign exchange. 8. Heard both sides and perused the records of the case. 9. Coming to the question as to whether the appellants are required to pay service tax on the risk interest/interest on gold loan/additional interest shown as incidental charges before October 2008, it is not disputed that the appellants are a NBFC and are engaged in collection of deposits and advancing of loans against security inter alia in the form of gold. The appellants charge interest on the l....
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....y visit your branch. Branches can show examples of our GLs closing vouchers in which this is clearly stated. In case of any doubts contact us at HO or your RM over the phone." It is this circular on the basis of which department alleges that these are the amounts collected in addition to the interest and therefore, are taxable to service tax. We find that learned counsel for the appellant submits that any contract or any other document for that purpose should be read and understood in a wholesome manner rather than picking up points in favour of one argument or the other. On going through the Circular, it is clear that some amount of interest is shown to be incidental charges. We are of the considered opinion that only because there is change in the nomenclature or in the treatment of the account, certain receipts would not cease to be interest. We find that Revenue could not adduce any documentary evidence to show that these incidentals were not interest. We find that in terms of the Section 65B(30) of the Finance Act, 1994, "(30) "Interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or othe....
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....e tax on token charges, postal charges, etc., we find that these are the incidental expenditure recovered by the appellants from their customers. Hence, they are in the nature of reimbursable expenses. Going by the ratio of the apex court's decision in the case of Intercontinental Consultants and Technocrats (supra), we find that these do not get counted for the purpose of charging service tax. Learned Authorized Representative for the department submits that the adjudicating authority has distinguished the above judgment in Order-in-Original dated 6.7.2018. Having gone through the order, we find that the learned Commissioner seeks to distinguish between the recoverable expenses discussed in the above case and the case of the appellant. It would be naïve to come to such a conclusion only because the reimbursable expenses discussed in Intercontinental Consultants and Technocrats (supra) relate to travel cost, hotel stay, transportation, etc., and in the instant case, it is about token charges, postal charges, etc. We find that distinguishing is only on the categories of expenses and not on the principle of exclusion of reimbursable expenses and thus, not acceptable. We also fin....
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....y service tax and their client is eligible to avail credit of the same and refund if applicable. There is no short-cut of the procedures. Since because the ultimate beneficiary is abroad, it cannot be claimed that the appellants are exporting services. Neither the place of rendering of the activity nor the type of service rendered by the appellants nor the recipient of such service are stationed abroad. Therefore, we are not inclined to consider such service as an export of service. The facts of the cases of Paul Merchants Ltd. and other cases are different from the instant case. In fact, the ratio of these cases would apply to M/s. Wall Street Finance Ltd., Bombay. For this reason, we also hold that the Notification No.19/2015-ST dated 14.10.2015 also is not applicable to the appellants. 11.1 Therefore, we conclude that the demand of service tax on the money transfer service rendered by the appellants requires to be upheld and we do so. 12. Coming to the claim of the appellants that they have discharged the liability of service tax in respect of air travel agent / rail travel agent / travel agent services and in respect of commission on insurance, we find that th....