2010 (3) TMI 485 - AT - Service Tax

Stay Banking and other Financial services - the appellants are operating fleet card transactions for enabling their clients to obtain oil from petrol pumps on credit. He says that these are not like other general credit cards as no other goods can be purchased with these cards nor the same can be used in any other shopping establishment except the authorized petrol outlets. He also says that no cash withdrawal is possible on these cards and the cards are issued on the appellants approving a loan agreement for the clients against hypothecation of vehicles. Held that prima facie fleet card service different from usual credit cards but it has common features such as making available credit to clients. Complete details of income from issue of such cards not furnished statutory records. Main elements of earning not included in returns. Prima facie no ground for complete waiver on merits or limitation.

Issues:
1. Whether the appellants' fleet card transactions qualify as credit card services.
2. Whether the demand for service tax is time-barred.
3. Whether the appellants have made out a case for full waiver of pre-deposit.

Analysis:

Issue 1: Fleet Card Transactions as Credit Card Services
The appellants argued that their fleet card transactions were distinct from general credit cards as they could only be used at authorized petrol outlets for purchasing fuel on credit, with no option for cash withdrawals or purchases at other establishments. The period from September 2004 to April 2006 was highlighted as a time when credit card services were not clearly defined. However, for the period after 1-5-2006, credit card services were explicitly included in the budget, encompassing both banking and non-banking financial companies. The Department contended that fleet cards were akin to credit cards and should fall under the defined services. The Tribunal found that while fleet cards had unique features, they still shared similarities with credit cards in providing credit for fuel purchases, leading to the decision that the appellants did not establish a strong case for a full waiver based on the nature of their fleet card services.

Issue 2: Time-Barred Demand
Regarding the time-barred demand for service tax, the appellants pointed out that they had paid taxes for certain elements of fleet card services during the second period, although the interest portion remained untaxed. The Department maintained that the financial charges earned by the appellants were significant and should not be considered exempt as interest. The Tribunal noted that the appellants had not provided complete income details from fleet card operations in their records, particularly omitting the main earning components like financial charges from their returns. Consequently, the Tribunal ruled that the appellants did not present a compelling case for a total waiver based on the time-bar issue.

Issue 3: Full Waiver of Pre-Deposit
The appellants failed to demonstrate financial hardship or a strong prima facie case for a full waiver of the pre-deposit requirement. Despite the unique aspects of their fleet card system, the Tribunal found that common features with credit cards existed, necessitating a pre-deposit to proceed with the main appeal. Considering the appellants' prior payment of a portion of the service tax and the need for a pre-deposit, the Tribunal directed them to submit an additional amount within a specified timeframe. Compliance with this directive would result in the waiver of the remaining balance and a stay on recovery during the appeal's pendency.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Chennai, highlights the nuanced considerations and conclusions reached on the issues of fleet card transactions as credit card services, the time-barred demand for service tax, and the appellants' eligibility for a full waiver of pre-deposit.

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