TaxTMI 
TaxTMI 
2025 (6) TMI 1359
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....2014 and 02.03.2015, wherein the following demands have been raised: Sl No Demand Cum Show Cause Notice No. & Date Period Involved Amount of Service Tax (Including Cess) Involved (in Rs.) 01 C. No. V (30)143/Prev/VCCL/Ran(H)/T-2/2014/8277-82 dated 04.12.2014 01.10.2007 to 31.12.2012 Rs. 1,48,28,953.00 02 C. No. V (65) 140/Vedika Cr. Capital/Adjn./Ran-I/2015/2910 dated 02.03.2015 January 2013 to March 2014 Rs. 38,30,224.00 TOTAL Rs. 1,86,59,177.00 2.1. The said Notices were adjudicated by a common order dated 28.03.2016 (issued on 31.03.2016), wherein the Ld. adjudicating authority has passed the following order: "(i) I confirm the demand of total service tax amounting to Rs.1,48,28,953.00 (Rs. One crore Forty eight lakh Twenty eight thousand Nine hundred Fifty three only) (including Education Cess and S. H. Ed. Cess not paid/short paid for the period from 01.10.2007 to 31.12.2012 involved in the Show Cause Notice C. No. V (30) 143/Prev/VCCL/Ran (H)/T-2/2014/18277-82 dated 04.12.2014 under Section 73 (2) of Chapter V of the Finance Act, 1994 read with Section 111 of the Finance Act, 2013 and the same is ordered for recovery from the said noticee no. 1; ....
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....ion 76 read with Section 78B of the Finance Act, 1994 for failure to pay the Service Tax for the period from January 2013 to March 2014. If Service Tax and interest determined at Sl. No. (vii) and (viii) is paid within a period of thirty days of the date of receipt of this order the penalty shall be twenty five per cent of the penalty imposed hereinabove, provided if such reduced penalty is also paid within the aforementioned period; (x) I impose a penalty of Rs. 10,000/ on the said noticee no. 1 under the provisions of Section 77 of the Finance Act. 1994 for contravention of various provisions of Finance Act, 1994 as discussed hereinabove." 2.2. Aggrieved by the confirmation of the demands of duty along with interest and imposition of penalties, the appellant has filed this appeal. 3. The Ld. Counsel appearing on behalf of the appellant submit that the ld. adjudicating authority has treated the activity of provision of granting loans for two-wheeler as 'finance lease' transaction and thus has demanded service tax on the entire interest income earned by the appellant against all three types of loans. It is submitted that service tax has been confirmed on various charges collect....
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....submits that no such notice was served to the appellant and hence the declaration filed by the appellant was a conclusive one. Reliance in this regard is placed by the appellant on the judgement of CESTAT, Mumbai in the case of M/s. Uravi T & Wedge Lamps Pvt. Ltd. versus Commissioner of CGST, Bhiwandi, reported in 2022 (12) TMI 1296 - CESTAT MUMBAI. 3.4. It is their further submission that the impugned Show Cause Notice dated 04.12.2014, covering the period from October,2007 to December,2012, was issued under Section 73(1) of the Finance Act, 1994.In this regard, the appellant states that Section 73(1) of the Act provides for issuance of notice within eighteen (18) months being the time-limit applicable for the period from 28.05.2012 to 13.05.2016, from the relevant date on the person chargeable with tax in cases other than fraud. Accordingly, the appellant submits that although the last date for issuance of the stated notice was 25.10.2014 (i.e., 18 months from the due date of filing of return i.e. 25.04.2013 even if the material period is considered upto March, 2013 instead of December, 2012), the same was issued on 04.12.2014 i.e. beyond the time limit prescribed under the law ....
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....recorded in P&L of the appellant instead of considering the interest income component in relation to two-wheelers only. 3.9. The appellant also made further submissions, which are summarized below: - (i) Total Charges @ 5%: Service tax on various charges collected by the appellant has been calculated on the quantum of 'Loans/Advances' recorded in the balance sheet or loan disbursed during the particular year whichever is higher. 'Loans/Advances' in balance sheet denotes amount of loan outstanding as on 31st March of a particular financial year. The appellant submitted a CA certificate certifying details of interest break up for the period October, 2007 to March, 2014 and details of Disbursement of loan break up for the period 2007-08 to 2013-14 . (ii) Loans/Advances in balance sheet: Loans/Advances in balance sheet includes personal loans against which no separate charges are being collected by the appellant and hence to be excluded from the calculation of service tax demanded. (iii) Agreement Charges: Service tax on agreement charges @ Rs. 500 per customer has been calculated over and above total charges and hence considered twice. (iv) Insurance Charges: The appellant ha....
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.... after making the lease payment, which is evident from Para 2(d) of Notification No. 26/2012-ST dated 20.06.2012. However, the appellant states that in the instant case of Loan against hypothecation of asset, it is purely and simply a case of giving certain amount of money to a borrower on Loan; the Loan may be given for a short term or Long term; during the period of enjoying the loan amount, the borrower is supposed to pay some amount as interest to the lender. It is pointed out that the ownership of the asset is always with the borrower, for which the loan may be taken by him; however, to protect the risk of non-payment of the loan amount, the asset is hypothecated to the lender, who can sell off the asset in case of failure to pay the loan amount by the borrower. Further, that during the Loan period, the asset is hypothecated to the lender, who has a lien over the asset [there is an endorsement by the lender]. It is also informed that on repayment of the full amount along with interest as per the terms of the contract, the lien over the asset is released by the lender by deleting the endorsement. In support of their above contention, the appellant submitted copy of a sample loa....
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.... the impugned Show Cause Notice dated 04.12.2014; mere signature and certification in Form VCES-1 filed by the appellant cannot prove deliberate act on part of the Director to disobey the law with an intent to evade payment of tax. 3.12.2. Accordingly, the appellant submitted that the penalties imposed in the impugned order are not sustainable and prayed for setting aside the same. 4. The Ld. Authorized Representative appearing for the Revenue reiterated the findings in the impugned order. 5. Heard both sides and perused the appeal records. 6. Regarding the demand of Rs.59,62,661/- confirmed on the interest income earned on loans provided for two-wheeler, we observe that the ld. adjudicating authority has considered the total interest income, as reflected in P&L Account of the appellant. It is a fact that interest earned on rendering of 'Banking and Financial Services' are exempted from payment of service tax. There is no dispute on this. In this case, the dispute has arisen on the loans rendered to purchase of two-wheelers. The Department has considered the loans rendered to two-wheeler purchase under the category of 'Financial Leasing'. However, while dem....
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....the interest earned is not liable to service tax under the category of 'Financial Leasing'. 6.2. In this regard, we find it appropriate to refer to the decision of this Tribunal in the case of M/s. Poonawalla Fincorp Ltd. (Formerly, Magma ITL Finance Ltd.) Versus Commissioner of Service Tax, Kolkata-II [2024 (2) TMI 618 - CESTAT Kolkata],relied upon by the appellant, wherein, vide order dated 08.02.2024, while hearing the matter on a similar issue, it was held as follows: "9. We observe that the Appellant enters into financing agreements with the customers wherein the customers purchase the assets in their name and approach the Appellant for the purpose of financing the same. The ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with the customers and there is no clause in the agreement providing the customers an option to purchase the product at the end of payment of all installments 9.4. In the present case, the ownership of the goods vests with the customers and the Appellant merely finances the purchase of such products by the owner. The ownership solely vests with t....
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.... no such notice was served to the appellant and hence we agree with the submission made by the appellant that the declaration filed by them was a conclusive one. In support of this view, we place our reliance on the decision of the Tribunal, Mumbai in the case of M/s. Uravi T & Wedge Lamps Pvt.Ltd. versus Commissioner of CGST, Bhiwandi, reported in 2022 (12) TMI 1296 - CESTAT MUMBAI, to be correct, wherein it was held as follows: "4.5 In absence of any such notice for rejection, it is but natural that appellant would act as per VCES-2 issued to him acknowledging the declaration. Appellant paid the declared liability and intimated the designated authority of the payment made. Even then the designated authority has not issued the settlement memo under Form VCES-3. Appellant cannot be faulted for the reason as stated in the impugned order. 4.6 Section 111 of the Finance Act, 2013 clearly provides that in case there is some liability or the declaration made is found to be improper substantially, then a show cause notice for confirming the additional tax liability would be issued under Section 111. No such notice has also been issued. In absence of notice under Section 111, the....
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....e adjudicating authority for the limited purpose of quantifying the demand of service tax for the normal period of limitation raised in the Notice dated 02.03.2015. The adjudicating authority should give an opportunity of personal hearing to the appellant and decide the issue within a period of three months from the date of receipt of this Order. The appellant is also directed to cooperate by providing all necessary information, for finalization of the issue. 7.3.1. In this regard, we have examined the various contentions raised by the appellant as to irregularities in the demand confirmed against them, as mentioned in paragraph 3.9 (supra): - (a) We find the request of the appellant for allowing cum duty benefit to be correct and accordingly, the adjudicating authority is required to allow the cum duty benefit to the appellant, while quantifying the demand under this category for the period from January, 2013 to March, 2014. (b) We also observe that the appellant has claimed that they have reimbursed 'insurance charges' to the insurance companies in case of loans provided for two-wheeler and hence, we find that these charges have nothing to do with the Service Tax l....
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....son imposition of penalties are found to be unwarranted. 10.1. Regarding the penalty imposed on the Director under Section 78A of the Finance Act, 1994, we are of the opinion that penalty shall not ordinarily be imposed unless the director obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of his obligation. Further, we take note of the fact that in the instant case, it has not been established, either in the impugned Show Cause Notices or impugned order, that the Director had acted in contumacious manner so as to warrant imposition of the penalty. The impugned order does not record any reason for which the said Director could be said to be illegally involved in the evasion of service tax. It is also seen from the records that Shri Gautam Jain duly co-operated during the entire investigation process as and when required which fact is also on record as duly acknowledged in the impugned Show Cause Notice dated 04.12.2014. We hold that mere signature and certification in Form VCES-1 filed by the appellant cannot prove deliberate act on part of the Director to disobey the law with an intent to e....