2014 (6) TMI 98 - AT - Service Tax

Waiver of pre deposit - Remittion of service tax consequent on under-disclosure of the total consideration received for providing the taxable banking and other financial services - Held that - so far as operating lease/ hire purchase transactions are concerned, on which demand of Rs. 35,47,359/- is confirmed, that Notification No. 4/2006-ST dated 01.03.2006 has exempted levy of service tax to the extent of 90% on financial leasing services including equipment leasing and hire purchase as defined in Section 65(12)(i) of the Act and on the interest component received on these transactions. The benefit of this exemption was claimed before the adjudicating authority, who adverted to the claim but failed to deal with the same and simply assessed tax on this aspect at the full rate. It is contended by ld. Counsel for the appellant and this contention is not disputed by that ld. DR that tax liability on operating lease/ hire purchase transactions, if taxable and after granting the benefit of exemption Notification No. 4/2006-ST would be about Rs. 40,000. Prima-facie invocation of the extended period is not justified. We therefore grant waiver of pre-deposit and stay of all further proceedings for recovery of the adjudicated liability, on condition that the appellant remits Rs. 2 lakhs (comprising the interest demand on cenvat credit availed plus the service tax payable (after exemption benefit) on operating lease/ hire purchase) within four weeks - stay granted partly.

Summary

Issues: Total levy confirmation, under remittance of service tax, consideration for banking and financial services, cheque bouncing charges, foreclosure charges, operating lease/hire purchase transactions, unauthorised utilisation of cenvat credit, extended period invocation, exemption notification applicability.

1. Total Levy Confirmation: The judgment confirms a total levy of Rs.88,72,130/- along with interest and penalties for alleged under remittance of service tax covering the period from April 2006 to March 2008. The adjudication order passed by the Commissioner confirmed the levy on various components such as check bouncing charges, foreclosure charges, and consideration received from operating lease/hire purchase transactions.

2. Consideration for Banking and Financial Services: The appellant's defences regarding the nature of cheque bouncing charges, foreclosure charges, and consideration from lease/hire purchase transactions were negated by the adjudicating authority. The appellant argued that these charges do not fall within the taxable issue of banking and financial services, citing certain precedents.

3. Unauthorised Utilisation of Cenvat Credit: The judgment mentions the levy of interest on alleged unauthorised utilisation of cenvat credit, amounting to Rs.1,56,247/-. The appellant undertakes to pre-deposit this amount while reserving the right to challenge it during the appeal hearing.

4. Exemption Notification Applicability: Regarding operating lease/hire purchase transactions, the judgment notes that Notification No. 4/2006-ST exempted 90% of the service tax on financial leasing services. The appellant claimed this exemption, but the adjudicating authority failed to address it properly, leading to an incorrect assessment of the tax liability on these transactions.

5. Extended Period Invocation: The judgment questions the justification for invoking the extended period for initiating proceedings beyond the normal limitation period under Section 73 of the Act. It grants a waiver of pre-deposit and stays further proceedings for recovery of the adjudicated liability, subject to the appellant remitting a specified amount within a given timeframe.

6. Pre-Deposit and Stay of Proceedings: The judgment grants a waiver of pre-deposit and stays all further proceedings for recovery of the adjudicated liability on the condition that the appellant remits a specified amount within four weeks. Failure to comply would result in the dismissal of the appeal for lack of pre-deposit.

7. Disposal of Stay Application: The judgment notes the disposal of the stay application and the rejection of miscellaneous applications as infractuous, indicating that the appellant did not pursue these applications further. Compliance reporting deadline is set for a specific date.