2014 (10) TMI 418 - AT - Service Tax

Waiver of pre deposit - activity of safe keeping of gold in its vaults - Banking and other financial services - Held that - Tribunal in the appellant s own case for the earlier period 2013 (12) TMI 45 - CESTAT CHENNAI observed that prima facie the provisions of Rule 6(2)(iv) of Service Tax (Determination of Value) Rules 2006 will apply not only to monetary loan but also to loan given in the form of gold. The other issue regarding the service tax for the amount of receipt in the form of margin of profit for safekeeping of the gold in the vault, the Tribunal directed the applicant to make a predeposit of about 10% of the tax - Conditional stay granted.

Summary

Issues:
- Demand of tax on safe keeping of gold in vaults
- Service tax payable on income earned on lending of gold
- Application of Rule 6(2)(iv) of Service Tax (Determination of Value) Rules 2006
- Predeposit requirement for tax amount
- Linking the appeal with other related cases

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved several key issues related to tax demands on banking and financial services provided by the applicants. Firstly, there was a confirmed demand of tax amounting to &8377; 1,47,35,188/- for the safe keeping of gold in the vaults during the period 2011-12. Additionally, a service tax of &8377; 1,28,66,043/- was imposed on the income earned from lending gold during the same period. The adjudicating authority also levied interest and penalty on the applicants.

Upon reviewing the records and considering the Tribunal's decision in the appellant's previous case, it was noted that Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules 2006 applied not only to monetary loans but also to loans given in the form of gold. The Tribunal directed the applicant to make a predeposit of approximately 10% of the tax amount in relation to the margin of profit earned from safekeeping the gold in the vault. As a result, the applicant was instructed to make a predeposit of &8377; 12,00,000/- within six weeks and report compliance by a specified date.

Furthermore, the judgment specified that upon making the predeposit as directed, the predeposit of the remaining dues would be waived, and the recovery of the outstanding amount would be stayed during the appeal process. Additionally, the Registry was instructed to link the current appeal with other related Appeal Nos. ST/40004/2013 and ST/358/2011 for consolidated consideration and efficient handling of the cases. The judgment was dictated and pronounced in open court, providing clarity on the directives issued by the Tribunal.