2007 (11) TMI 142 - AT - Service Tax

Financing the purchase of vehicles - there is difference between Hire Purchase Scheme and Hire Purchase Finance Scheme - in the Hire Purchase Scheme, the ownership vests with the service provider who finances, whereas in the Hire Purchase Finance Scheme , the ownership is only with the hirer vehicle is registered in the name of the hirer and not in the name of the appellant-company - service rendered is actually Hire Purchase Finance Scheme & not Hire Purchase Scheme so tax not leviable

Summary

Issues:
- Discharge of Service Tax liability on hire purchase services
- Distinction between "Hire Purchase Scheme" and "Hire Purchase Finance Scheme"
- Time-barred demand
- Suppression of income related to services
- Confirmation of Service Tax liability on leasing of machinery

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs and Central Excise, Guntur, regarding the failure to discharge Service Tax liability on hire purchase services. The Adjudicating Authority confirmed a demand of Service Tax and imposed a penalty. The appellants challenged the order, arguing that the distinction between "Hire Purchase Scheme" and "Hire Purchase Finance Scheme" was crucial. They cited relevant legal precedents to support their case, emphasizing that the ownership in the "Hire Purchase Finance Scheme" lies with the hirer, not the service provider. The Tribunal examined the facts and upheld the argument, setting aside the Service Tax liability on hire purchase income.

Regarding the income from leasing machinery, the Tribunal found it liable for Service Tax. However, due to the lack of a clear split-up of income in the original order, the matter was remanded to the Original Authority for proper computation of Service Tax liability only towards leasing income. The Tribunal directed the Original Authority to issue a new order within three months. Thus, the appeal was disposed of with a decision on each aspect of the case, clarifying the tax liabilities based on the nature of services provided.