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TMI Blog2013 (11) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... by Assistant Commissioner, Valsad where penalty under Sec. 76 of the Finance Act 1994 was not imposed. The issue involved is whether or not interest-charges on EMI (Equated Monthly Installment), collected as 'Documentation and Service Charges' at the time of entering into hire purchase agreements, is chargeable under Banking and other financial services and what service tax rate will be applicable when the services are contracted in the period when rate was lower, but enhances in the entire period of EMI's. 2. Sh. Jigar Shah (Advocate) appearing on behalf of the appellant argued that appellant is not providing any Banking and Financial Services which also stands exempted under Notification No. 25/2004(ST) dt. 10/09/2004 and also as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst appellate authority decided the case against the appellant:- (i) Whether the interest contained in the EMIs paid which include the interest earned on advances will be a consideration by service provider while extending Banking and other Financial Service by the appellant. (ii) Whether the rate of service tax leviable as per Sec. 66 of the Finance Act 1994 varied from 5% to 8% under Finance Act, 2003 w.e.f. 14/05/2003 and from 8% to 100% +2% ST under Finance Act, 2004 w.e.f. 10/09/2004, should be the higher rate by subsequent Finance Acts or the rate prevailing at the time of extending into contract for the services. 4.1 So far as charging of interest on loans/advances is concerned appellant has argued that as per the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of installments is not correct. Therefore, the rate of Service tax will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount applying the higher rate, which came into effect from 14.05.2003, will not be applicable in respect of the contracts entered prior to that date. Hence, we set aside the impugned order and allow the appeal with consequential relief, if any. In view of the above it is hold that the rate of service tax, prevailing on the date on which contract is entered into will be applicable and not the higher rates made effective the subsequent Finance Act periods during which EMIs are continued to be paid. 5. Based on the above observations appeal filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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