TaxTMI 
TaxTMI 
2024 (2) TMI 1132
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....mit of Rs. 65,10,497/- under Section 76 of the Act, Rs. 1,000/- under Section 77 of the Finance Act and Rs. 75,00,000/- under Section 78 of the Finance Act 1994. 2. Briefly the facts of the present case are that the appellant is engaged in the manufacturing of photocopying machine, accessories and has got centralized service tax registration from 04.08.2003 and for the category of "Maintenance and Repair" and "Banking and other financial" services from 04.11.2004. During the course of Audit conducted by the department, it was notices that the appellant apart from the manufacturing is also involved in Repairs and Maintenance service/lease and equipment finance pertaining to their products. 3. The appellant has shown interest income under the head "Lease and Equipment Finance Income" in their annual report/balance sheets pertaining to the periods 2002-03 and 2004-05. However, they obtained registration for Banking and Financial service "Lease and Equipment Finance w.e.f. 04.11.2004 whereas service tax on leasing and equipment financing service by body corporate is leviable to service tax w.e.f. 16.08.2002. After several rounds of audit objections and counter replies a show cause no....
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....ure of transactions of Rs. 9,37,76,673/- under following three heads: - Interest Income- Rental (Rs. 6,69,75,182/-) - Interest Income- Funding (Rs. 1,44,71,761/-) - Finance Income- Facility Management (Rs. 1,23,29,729/-) 9. She further submits that as regards the interest income rental, the demand of service tax has been confirmed for providing equipment as per the agreement under head BOFS. The Ld. Counsel further submits that the appellant entered into operating lease with its clients wherein it provided equipment on short term basis which was to be returned at the expiration of the agreement. The agreement specifically barred client from transferring, disposing off, selling, pledging or encumbering the equipment or change the location of the equipment. Further, the ownership of the asset always vested with the appellant and the client was not entitled to purchase the asset at the end of lease agreement. 10. Ld. Counsel also refers to article 3 of the agreement which is on record to prove this arrangement. She also submits that the term "Financial Leasing" was inserted under BOFS in section 65(12) of the Act through an explanation from 01.06.2007 having retrospective effe....
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....bmits that financial leasing by a body corporate is brought under service tax from 16.08.2002 and therefore the appellant will be liable for service tax only on amount received from financial leasing contracts entered into post 16.08.2002. 15. She also submits that the computation of demand is incorrect because the department has not considered the tax and interest already paid while raising the demand against the appellant. She also submits that the present demand should be reduced to the extent of Rs. 4,94,806/- already paid on agreements entered into after 16.08.2002. Further, Rs. 2,38,161/- was paid under Service Tax Amnesty Scheme, 2004 should be adjusted against the interest liability and further, cum-tax benefit is also available to the appellant. 16. She further submits that extended period of limitation cannot be invoked in the present case and the demand of service tax which pertains to be period 16.08.2002 to 31.12.2005 has been raised by invoking the extended period of limitation vide show cause notice dated 22.10.2007. She further submits that extended period of limitation in this case cannot be invoked as there was no willful suppression or misrepresentation of any ....
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....ces including equipment leasing and hire-purchase; (ii) credit card services; (iii) merchant banking services; (iv) securities and foreign exchange (forex) broking: (v) asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, but does not include cash management; (vi) advisory and other auxiliary financial services including invend ment and portfolio research and advice, advice mergers acquisitions and advice on corporate restructuring and strategy; (vii) provision and transfer of information and data processing, and (viii) other financial services, namely, lending: issue of pay order, demand draft, cheque, letter of credit and bill of exchange; providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank accounts; (b) foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a);] 19. Further, the taxable service of banking and financial service has been defined under section 65(105)(zm) is as under: [(zm) [to any person], by a banking company or a financial ins....
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....at in the present case service tax under banking and other financial service has been demanded from the appellant on the lease and finance income received in respect of contract entered into prior to 16.08.2002. It is pertinent to note that financial leasing services provided by the appellant i.e. body corporate are taxable only from 16.08.2002 whereas in the present case service tax is sought to be demanded on the basis of the agreement prior to 16.08.2002 hence we hold that impugned order confirming demand of service tax is liable to be set aside on this ground alone. 23. Further, we find that the whole premise on the basis of which the present demand has been confirmed is factually incorrect and it appears that Ld. Commissioner has not understood the nature of the transactions. In fact, the demand has been confirmed on the basis that the appellant has collected Rs. 9,37,76,673/- under the following heads which is clear from the annexure to the show cause notice: - Interest Income- Rental (Rs. 6,69,75,182/-) - Interest Income- Funding (Rs. 1,44,71,761/-) - Finance Income- Facility Management (Rs. 1,23,29,729/-) 24. As regards interest income-rental, we find that the appell....
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....n. Hence, the demand is liable to be set aside and we accordingly do so. 27. We also take note of the circular no. F.No. 334/1/2007-TRU 28.02.2007 which clearly provides that all transaction particularly sale and lease should be examined to find out the true nature of the transactions which has not been done in the present case by the Ld. Commissioner. As regards invocation of extended period alleging suppression to confirm the demand, we find that the appellant has never suppressed or misrepresented any fact relating to service provided. In fact, the appellant is duly registered with the service tax authorities under banking and financial service and paid service tax of Rs. 2,38,161/- along with interest of Rs. 27,370/- under the Amnesty Scheme, 2004. It shows that all the facts were in the knowledge of the department w.e.f. 2004 i.e. the appellant got itself registered with the service tax authorities under the banking and financial services and paid service tax on agreements entered into after 16.08.2002. Before issuing the show cause notice dated 22.10.2007 a series of correspondence transpired between appellant and department which shows the department was aware of the transa....