2009 (3) TMI 891 - AT - Service Tax

Summary

In the case of Appellate Tribunal CESTAT MUMBAI, the adjudicating authority demanded Service Tax of over Rs. 76 lakhs from the appellant for the period April 2003 to March 2006. The tax was assessed on a value of Rs. 3.5 crores from an agreement for lease of equipment. The appellants collected this amount in 26 equal installments from the lessee, which the lower authorities considered as taxable value of "Banking and Other Financial Services." The main argument of the appellants is that they are not covered by the definition of the service under Section 65 of the Finance Act, 1994. The appellants' Counsel argued that the appellant-company, though a body corporate, would not come within the definition of "any other body corporate." The Counsel cited three stay orders from the South Zonal Bench of the Tribunal, which supported the argument that a company should be rendering financial services only if its transactions with customers are of a financial nature. The Jt. CDR argued that the real nature of the transaction between the appellants and their lessee was that of a financial service, based on the provisions of the agreement. The Counsel contested this by stating that there can be no financial service if there is no financial gain to the service provider. The Tribunal decided to waive pre-deposit and stay recovery of the service tax amount and penalty amount until the final disposal of the appeal, based on the orders cited by the Counsel.