TaxTMI 
TaxTMI 
2025 (5) TMI 1830
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....x (i) Cheque Bouncing charges (Rs. 21,95,743/-) (ii) Foreclosure charges (Rs. 31,29,028/-) (iii) Operating lease rental (Rs.35,47,359/-) (iv) Interest on wrongful availment of Cenvat Credit (Rs.1,56,247/-) Demand of service tax (i) Cheque Bouncing charges (Rs. 42,500) (ii) Foreclosure charges (Rs. 9,64,777/-) (iii) Import of Services (Rs. 5,253/-) Period of dispute 2006-07 and 2007-08 Oct 2007-June 2008 (cheque bouncing & foreclosure). 2007-08 to 2009-10 (import of services) Impugned Order dated 07.11.2012 dated 28.07.2015 SCN dated 21.10.2011 22.04.2013 Demand Rs. 88,72,130 under section 73 of the Finance Act, 1944 ("the Act") along with interest Rs. 18,66,403/- under Section 73 of the Act along with interest Penalty Rs.5,00,000 under rule 15 (2) of the Credit Rules; Rs.5,000 under section 77 of the Act & Rs. 88,72,130/- under Section 78 of the Act. Rs 5,000 under section 77 of the Act & Rs.18,66,130/- under Section 78 of the Act. 2. Briefly the facts of the present case are that GE Capital Transportation Financial Ser....
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.... terms of Rule 6(3)(c) of CENVAT Credit Rules, 2004. After following the due process, the learned Commissioner adjudicated the show cause notices and passed the impugned order wherein the following demands were upheld along with interest and penalties : ST/55729/2013 ST/54344/2015 Issue Demand of Service Tax Issue Demand of Service Tax Cheque Bouncing charges Rs. 21,95,743/- Cheque bouncing and foreclosure charges Rs. 9,70,030/- Foreclosure Charges Rs.31,29,028/- Import of services Rs. 8,96,100/- Operating lease rental Rs.35,47,359/- Wrongful availment of Cenvat Credit (interest demand) Rs. 1,56,247/- 5. Heard both sides and perused the material on record. 6. Learned Counsel for the appellant submits that the impugned orders are not sustainable in law as the same have been passed without properly appreciating the facts and the law. As regards the first issue of Cheque Bouncing charging in both the appeals, learned Counsel submits that the issue is no more res integra and the same has been settled in favour of the app....
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.... the Finance Act which provides that a transaction would be classifiable as financial leasing, only if the transaction satisfies all the four following conditions simultaneously: (i) contract for lease is entered into between two 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. 9. Learned Counsel further submits that in the present case, the third sub-clause of the Explanation is not satisfied whereas all the conditions need to be fulfilled collectively and therefore, according to the learned Counsel the transaction will not amount to financial lease and will not be taxable under BOFS. Learned Counsel further placed reliance on the Notification No.4/2006-ST dated 01.03.2006 wherein the Government has exempted the service tax on the 90% of the amount representing as interest. He further submits that in the present case the demand ....
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....e expenses incurred in foreign currency expenditure is with respect to the following activities as given in his written submissions which is reproduced herein below: This demand relates to only Appeal No. ST/54344/2015 : Nature of the service Taxable Amount Submissions Equity Shares purchased by the employees under GSPP Rs. 34,21,009/- These shares are purchased by the employees and a contribution is made by the Appellant as per HR Policy. It is submitted this service was provided by the Appellant to its employees and was not taxable as it forms part of the remuneration of the employees. The said activity is not a service and is not classifiable under any of the clauses of Section 65(105). Hence, the same is not taxable. Legal Advisory services Rs.18,66,977/- Legal Services were taxable w.e.f. 01.09.2009 under 65(105)(zzzzm). However, services in the present case were received prior to that, during FY 2007-2008 Hence, these will not be liable to service tax. Medical treatment of employees Rs. 4,66,000/- This amount was for the medical treatment of employees. Thus, they were in the nature of reimbursement and not towards any service, thus, not tax....
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....) of the Service Tax (Determination of Value) Rules, 2006 which clarifies that value of taxable services does not include interest on loans. He further submits that Rule 6(2)(iv) merely exempts the interest on loans, not the service of lending and therefore, the appellant has correctly availed and utilised the CENVAT credit and the activity of providing lending and securitisation services are not exempt. For this submission, he relied upon the following decisions: * Gautam Sahakari Bank Ltd. vs. Commr. Of C. Ex., Aurangabad 2019 (20) G.S.T.L. 584 (Tri. - Mumbai) * Ahmednagar District Central Co-Op Bank Ltd. vs. C.S.T., Arungabad 2018 (364) E.L.T. 1098 (Tri.- Mumbai) * Sundaram Finance Ltd vs. Commissioner of LTU Chennai 2018-TIOL-3288-CESTAT- MAD 14. As regards the extended period of limitation, the learned Counsel submits that the demand has been confirmed by invoking extended period of limitation which is not sustainable because the appellant has not intentionally and wilfully suppressed the fact. He further submits that the Department has failed to bring in any evidence to establish the suppression on the part of the Appellant. He also submits that ....
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....in nature and are not for the purpose of consideration of any service. As regards the demand with respect to foreclosure charges, the Tribunal set aside the same by relying upon the decision of the Larger Bench in the case of Repco Home Finance Ltd. (supra) which has categorically held that foreclosure charges cannot be viewed as alternative mode of performance of the contract because they arise upon repudiation of specified terms of contract and are intended to compensate the injured party i.e. banks and non-banking companies. It is pertinent to mention that the Department filed appeal against the decision of the Tribunal and the Hon'ble Supreme Court, vide its Order dated 29th July, 2024, dismissed the appeal of the Department and upheld the order of the Tribunal. In view of the fact that the matter stands settled by the Hon'ble Apex Court, the demand on these two issues are set aside. 18. As regards the another demand of service tax on financial lease which is there in Appeal No. ST/55729/2013, we find that as per the sample agreement between the appellant and their customer, it is not the financial leasing as defined under Explanation to Section 65(12) of the Finance Act rat....
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....ax. Further, as regards the medical treatment of employees are concerned, they are in the nature of reimbursement and not towards any service hence not taxable under any clause of the Section 65(105). As regards the amount received in respect of the services received prior to October 2007, we find that the said amount pertains to the services received by the appellant prior to 2007 and the SCN was issued on 22.04.2012 therefore, the demand cannot sustain as the same is beyond the extended period of limitation. Further, we also find that in the SCN, demand has been raised on import of services without specifying the specific category under which the service tax has been demanded. Further, the impugned order has also not specified the category under which the demand has been confirmed. Therefore, in view of the decisions cited supra, the demand is liable to be set aside on this ground also. Therefore, we hold that the amount remitted in foreign currency outside India was not subject to service tax during the relevant period. 22. As regards the demand of interest on wrongful availment of CENVAT credit in Appeal No. ST/55729/2013 is concerned, we find that the demand of interest in ....