9911796707
TMI Blog2012 (10) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chennai. The Appellant, a non-banking financial company are engaged in financing purchase of commercial vehicles, cars etc., and registered under Banking & other financial services, Business Auxiliary Service, Business support service etc. 1.1 The facts of the case, in brief, are that the Appellant having agreement with M/s. Bharat Petroleum Corporation Ltd., and M/s. Indian Oil Corporation Ltd., extended credit facility for purchase of fuel/lube oils through co-branded fleet cards. Based on the credit worthiness of customers, credit facility was extended and various charges viz. Joining fee, Membership fee, Card annual fee, Finance charges etc. had been collected from the card holders. A dispute arose, with regard to the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hecation agreement and the vehicle is taken as collateral whereas credit cards do not have such obligations; (iv) that the "Fleet Card" is different from credit card or petro card issued by banks and oil companies and the relationship between the card holder, issuing bank and the appellant should be analyzed so as to decide whether the income is chargeable to tax under sec. 33(a) of the Act; (v) that Clause(iii) of Section 65(33a) of the Act, is attracted only when any sum is charged on the merchant establishment by the bank settling the amounts transacted through a card and that too is restricted to the value of the amount retained as margin by the acquiring bank; (v) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FL. 5. I have gone through the case records and the written submissions as well as oral submissions at the time of personal hearing and the decisions relied upon by the appellant. After waiving pre-deposit, I take up the main appeal for decision. The issue in short in the present appeal is whether Interest recovered from the defaulters is liable for service tax under the category 'credit card service'. 6. Before proceeding to the main issue, the meaning of a credit card and a fleet card has to be understood. Wikipedia defines, 'a credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil companies directly. It also has limited usage and is thus distinguishable with the credit cards on the basis of scope of usage and restrictions. A credit card issued by a financial company gives the holder an option to borrow funds, usually at point of sale and charges interest and are primarily used for short term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual's credit rating. 8. The appellants plea is that when the entire income is nothing but interest received on a loan transaction, as to how there could be a demand of service tax under the provisions cited in the notice under reference. They argue that income derived from extending of credit fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "19.2 The "interest on loans" has been specifically excluded by way of amendment to the provisions relating to valuation (S.67). All such interests that are in the nature of interests on loans would thus remain excluded from taxable value." 11. Further, vide Notification No. 29/2004-S.T., dated 22-9-2004 it has been explained that there would be no service tax liability on interest and discounting charges connected with services of providing overdraft, cash credit or discounting of bills. The relevant portion is extracted below : '................., hereby exempts so much of the value of taxable service provided to a customer, by a banking company or a financial institution including a non-banking financial company, or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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