9911796707
TMI Blog2013 (8) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax charged to the customer gets increased on account of the differential amount charged by the applicant. - applicant has committed serious irregularity by taking Cenvat credit on a service, the cost of which is separately billed to the customer without service tax component which situation is comparable to a situation where credit of excise duty paid on inputs is taken and utilized for clearance of final product but the input is sold without reversal of the cenvat credit taken when it was received into the factory. Service being intangible, arguments are raised based on Rule 5 of Service Tax (Determination of Value) Rules, 2006 etc. But the situation is essentially the same as in the case of removal of inputs without reversal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were deposited in the bank of the applicant as and when payment of installments became due from each client. In certain cases, such cheques were dishonoured. In such a situation, the bankers were raising bills on the applicant towards cheque dishonouring charges along with service tax implying that the bank was considering such services to be part of Banking and Financial Services rendered by the Bank to the applicant. The applicant was taking Cenvat credit of service tax paid by the bank on the invoices received by them from the bank. Further, the applicant was also collecting the charges billed by the bank from its customers without any service tax for such charges. Revenue was of the view that the bills raised by the applicant was tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, he submits that applicant has been making losses and there is already an accumulated loss of about Rs.200 crores and they will be put to great financial difficulty if any pre-deposit is ordered in this case. He also submits that service tax for this activity has already been collected by the bank and paid and on the same activity service tax cannot be demanded from the applicant for a second time. Therefore, he prays that his appeal may be admitted without any pre-deposit. 4. The Ld. AR for Revenue submits that both Banking Companies and Non-Banking Financial Companies provide banking services as defined under section 65 (12) and section 65 (105) (zm). section65 (105) (zm) reads as under: 65 (105) (zm) taxable service means any servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service is billed without recovering service tax from the customer. In this process, the applicant has stripped the service tax paid by the banks in his hands for utilizing such amounts for paying his liability on other taxable services without including the cost of the input services in the value of his output service. He argues that Cenvat credit can be taken only if charges levied by the banks are considered as an input service. For a service to be considered as an input service, it is necessary that the value of service should form part of the cost of an output service. By adopting a practice by which Cenvat credit is taken and cost of the services is billed separately to the customers, the applicant has caused loss to the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, he argues that this is a case where basic principles of value added tax has been contravened by the applicant and therefore pre-deposit of the entire disputed tax amount should be ordered. He further submits that if pre-deposit is not ordered, it will become impossible for Revenue to recover money from the applicant at a later stage and the applicant is in the process of winding up its business. 8. We have considered the arguments on both sides. Prima facie, we are of the view that handling dishonoured cheques is in relation to Banking and Financial Services and consideration received for such activity is taxable under section 65 (105) (zm) both in the hands of bank as well as the applicant. Therefore, applicant should have paid se ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
