2011 (4) TMI 1155 - AT - Service Tax

Demand of service tax penalty and interest - Contention of the department was that the conditions of Notification No. 29/2004-S.T. is not being fulfilled by the appellant that disentitled them to the benefit of that notification - appellant submitted that the appellant being a banking company has followed all RBI guidelines and nothing was undisclosed. There was no suppression of any detail and the debit slips in all transactions clearly disclose interest and other receipts Held that - appeal is remanded to the original Authority to grant fair opportunity of hearing to the appellant

Summary

Issues: Challenge to service tax and cess levy under Notification No. 29/2004-S.T. by a banking company, failure to fulfill conditions of the notification, requirement of disclosing interest amount separately in invoices, appeal for appropriate relief.

Analysis:
The appeal was filed by a banking company challenging an Adjudication order that levied service tax and cess amounting to Rs. 56,90,281/- along with penalty and interest. The department contended that the appellant did not fulfill the conditions of Notification No. 29/2004-S.T., which required the exemption of the value of taxable services related to banking facilities if the interest amount was separately disclosed in invoices. The Authority observed a failure to provide necessary particulars as required by the Service Tax Rules, 1994, leading to the denial of benefits under the notification.

The appellant argued that they complied with all RBI guidelines, disclosed all details without suppression, and clearly showed interest and other receipts in debit slips for all transactions. On the other hand, the Revenue Department supported the lower authorities' order. After hearing both sides and examining the records, the Tribunal acknowledged that the appellant, being a banking company, faced challenges in strictly meeting the disclosure requirements under the Finance Act, 1994. However, the Tribunal emphasized that if the interest amount was separately disclosed as per the notification, technical barriers should not hinder granting appropriate relief.

The Tribunal concluded that once it was satisfied that the appellant fell within the exemption criteria, strict adherence to instructions was unnecessary under the law. The Tribunal decided to dispose of the appeal with the consent of both parties, directing the appellant to provide evidence as required by the notification to the original Authority. The appeal was remanded for a fair hearing to examine the case's merits in light of the exemption notification's intention, emphasizing the importance of evidence presentation and compliance with notification conditions for a favorable outcome.