TaxTMI 
TaxTMI 
2026 (9) TMI 657
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....at the appellant was engaged in the activity of lending money for the purchase of vehicles, on a hypothecation basis, to its customers. The appellant paid service tax on charges such as the processing fee, documentation fee and administrative fee collected from its customers for extending the loan, but did not pay service tax on the service of extending the loan itself, that service being specified in the negative list under Section 66D(n)(i) of the Finance Act, 1994. The appellant availed the services of recovery agents to recover the loan from defaulting customers and to repossess the vehicles. The recovery agents paid service tax on the charges received by them for the services rendered to the appellant, under the category of Business Auxiliary Services. With effect from 11.07.2014, in terms of Notification No.30/2012-ST dated 20.06.2012, as amended by Notification No.10/2014-ST dated 11.07.2014, the appellant paid service tax on the charges of the recovery agents under reverse charge. 3. It was noticed that, during the period from July 2011 to March 2015, the appellant had availed CENVAT credit of the service tax paid on services received from the recovery agents. The credit....
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.... 2015, was ineligible and inadmissible. 6. It further appeared to the Department that the appellant had contravened the provisions of Rule 3(1) read with Rule 2(l) of the CENVAT Credit Rules, 2004. The availment of CENVAT credit on the recovery agents' services was not disclosed to the Department in any manner, and was not declared in the periodical ST-3 returns filed by the appellant. The availment of this ineligible credit would have gone unnoticed but for the verification carried out by the officers during the compliance check. It therefore appeared that the appellant had availed and utilised CENVAT credit of the service tax paid on the recovery agents' service in deliberate violation of the provisions of law, with intent to evade payment of service tax, thereby warranting invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994, for demand of service tax. 7. A show cause notice, No.04/2016 dated 29.01.2016, was accordingly issued to the appellant, disallowing and demanding the ineligible credit of Rs.2,03,91,255/- under Rule 14 of the CENVAT Credit Rules, 2004 read with the proviso to Section 73(1) of the Finance Act, 1994, tog....
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....T Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. The appellant has contravened the provisions of the CENVAT Credit Rules, 2004, viz., Rule 3 thereof, inasmuch as the appellant has taken inadmissible CENVAT credit. d) That the availment of cenvat credit on the services of recovery agents was not disclosed to the department in any manner and was also not declared in the periodical ST-3 returns. Had the intention of the appellant been bonafide, it would have sought clarification from the department. The availment of ineligible credit would have gone unnoticed but for the verification carried out by the officers during compliance verification. Therefore, it is held that the above omissions and commissions of the appellant amount to suppression of facts with intention to evade payment of service tax, and that the extended period of demand under the proviso to Section 73(1) of the Finance Act, 1994, read with Rule 14 of the CENVAT Credit Rules, 2004, is rightly invokable in this case. 9. Shri Raghav Rajeev, Ld. Advocate appearing on behalf of the appellant contended that the dispute pertained to eligibility to avail cenvat credit on procurement of collectio....
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....e Tax, Pune, 2019 (6) TMI 1593 - CESTAT Mumbai. The Department's reliance on an earlier stay order in Bajaj Finance, 2014 (35) STR 367, it was submitted, is misconceived: that order records no more than a prima facie view at the interlocutory stage, and stands superseded by the final decision of the very same Tribunal, in the very same appeal, which decided the matter on merits in the appellant's favour. 12. Ld. Counsel submitted that Order-in-Appeal Nos.5 and 6 of 2023, in the appellant's own case, had taken the view that the decision in Bajaj Finance (2018) carries no precedential value, since the Department did not carry it in further appeal on account of the monetary limit prescribed for filing appeals. This, it was contended, runs contrary to law: a decision of the Tribunal continues to bind subordinate authorities, and to hold the field as a precedent, so long as it has not been reversed or set aside by a superior forum, and non-filing of a further appeal on grounds of monetary limit does not detract from it. Reliance was placed on Varun Beverages v. Commissioner of Customs, GST, Jaipur, 2022 (2) TMI 731 - CESTAT New Delhi, and Prem Henna Pvt. Ltd. v. Commissio....
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....o financing, and is thus independently covered by the "includes" clause as well. Reliance in this regard was also placed on Bajaj Finance Ltd. v. Commissioner of Central Excise, Pune-I, 2018 (10) GSTL 251 (Tri.-Mum.). 15. On a separate ground, it was submitted that the impugned Order-in-Original travelled beyond the scope of the show cause notice. Show cause notice No.4/2016 dated 29.01.2016, it was pointed out, confined the allegation to whether the recovery agent's service was "used for providing" the appellant's output service within Rule 2(l), and neither invoked Rule 2(p) of the CCR nor called upon the appellant to show cause why its lending activity, in so far as the consideration therefor is represented by interest, should not be treated as falling outside the definition of "output service". The impugned order, it was submitted, for the first time held that the appellant's output activity of lending finance, being represented by interest and thus outside the levy under Section 66D(n) of the Finance Act, 1994, does not qualify as an "output service" under Rule 2(p) of the CCR, a finding stated to be wholly beyond the scope of the notice and on which the appella....
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....ion including a non-banking financial company, engaged in providing services by way of extending deposits, loans or advances, in addition to options given in subrules (1), (2) and (3), shall have the option to pay for every month an amount equal to fifty percent of the CENVAT credit availed on inputs and input services in that month." 18. Rule 6(3B), it was submitted, is a special, non-obstante provision enacted for banks and NBFCs engaged in extending loans, entitling such an appellant to fifty percent of the CENVAT credit earned by it, notwithstanding Rule 6(1), (2) and (3); the appellant, being such an NBFC, had rightly restricted its credit to that extent. It was contended that, were the Department's view, that lending does not qualify as an output service at all, to be accepted, Rule 6(3B) would be rendered wholly otiose and nugatory qua NBFCs engaged in the lending business, an interpretation impermissible in law. 19. On limitation, it was submitted that the extended period could not have been invoked in relation to show cause notice No.4/2016 dated 29.01.2016. The availment of the credit, it was submitted, stood duly reflected in the appellant's ST-3 returns, s....
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....its a provider of output service to take credit of the service tax paid on "any input service", "input service" being defined, for the relevant period, under Rule 2(l) has two independent limbs: the "means" clause, covering any service used by the provider of output service "for providing" an output service, and the "includes" clause, covering specified categories of service, among them services used in relation to "security" and "financing", whether or not they separately satisfy the means clause. 24. The short question is whether the service of a recovery or collection agent, engaged by an NBFC to recover instalments in default and, where necessary, to repossess the vehicle hypothecated as security, is a service used "for providing" the appellant's output service of lending. The Adjudicating Authority answered this in the negative, on the reasoning that the output service of lending stands complete on disbursement of the loan, and that recovery, being consequent upon default, is a subsequent and severable activity that cannot be said to be "for providing" an output service already rendered. 25. We are unable to accept this reasoning. The business of lending money, wheth....
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.... precedential value or its binding character on subordinate authorities so long as it has not been set aside by a competent superior forum; a decision of this Tribunal does not lose its character as a precedent merely because it went unchallenged for reasons unconnected with its correctness. 28. We are accordingly of the view that the service of the recovery/collection agents engaged by the appellant, for recovery of instalments in default and enforcement of the security furnished by way of hypothecation of the financed vehicle, is a service used by the appellant "for providing" its output service of lending, within the "means" clause of Rule 2(l) of the CCR. 29. That finding is sufficient to dispose of the issue in the appellant's favour. We may, however, also observe, without resting our conclusion upon it that the same service would, in our view, equally qualify under the "includes" clause of Rule 2(l) as a service rendered in relation to "security" and to "financing". The vehicle financed by the appellant stands hypothecated to it as security for repayment, and the engagement of the recovery agent, on default, is directed at nothing other than enforcement of that very....
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.... facts, or contravention of the provisions of the Act or the Rules with intent to evade payment of tax. Something more than a mere omission, or an interpretation of the law that does not ultimately find favour, is required: there must be a positive act of concealment, or a deliberate withholding of information that the appellant knew was required to be furnished. The finding in the impugned Order-in-Original, that non-disclosure of the credit availed on recovery agent's service in the ST-3 returns, without more, evidences suppression with intent to evade, does not, in our view, meet this threshold, more so where, as the appellant contends, the credit stood reflected in its returns and where the prescribed ST-3 format does not otherwise call for a service-wise break-up of the credit availed. 33. We are conscious that the question whether recovery or collection agent's service qualifies as an eligible input service has been the subject of divergent views over the years, including the interim, prima facie view expressed in the stay order in Bajaj Finance itself, before being authoritatively settled, at least at the level of this Tribunal, in the appellant's favour. Such....