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TMI Blog2013 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no justification at all for demanding service tax on the margin which they earn on the transaction. The department during investigation has made a request to quantify the amount and the charges the applicant would charged for safe vaults of comparable size, which the applicant has not furnished - provisions of Rule 6 (2) (iv) of Service Tax (Determination of Value) Rules, 2006 will not apply only to monetary loan and not to loan given in the form of gold - applicant directed to make a pre-deposit - Partial stay granted. X X X X Extracts X X X X X X X X Extracts X X X X ..... t on gold loaned to artisans i.e., the loan is given in the form of gold. This activity is different from conventional gold loans where money is given on loan against gold as security. Such gold are used by the artisans in their business activities. On the repayment of the loan, the artisans were supposed to return the same amount of gold, which was originally given to them. Further they were also required to pay an interest on the funds deployed for giving gold on loan. The applicant was not paying service tax on this amount because Rule 6(2) (iv) of Service Tax (Determination of Value) Rules, 2006 excluded interest on loan from the value of services. However, the Revenue was of the view that such exclusion is only in respect of monetary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that if at all service tax is payable it can be only on the safe custody charges and not on the margin in purchase and sale and as such, demand is not maintainable. If at all anything is maintainable, tax demand may correspond to rental value of the vaults which will be very marginal as compared to margin in trading. As regards, interest on loan, he submits that the loan of gold is given to the artisans by employing the financial resources at the applicants disposal, and it is necessary to charge interest for money deployed in acquiring the gold that is given on loan The exemption under Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 did not provide that interest on monetary loan alone was exempted. But the adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the margin which they earn on the transaction. The department during investigation has made a request to quantify the amount and the charges the applicant would charged for safe vaults of comparable size, which the applicant has not furnished. We note that the adjudicating authority has recorded in para 11.1 of his order that such information was asked and such information was not given. 6. Prima facie, we are not in agreement with the argument of Revenue that provisions of Rule 6 (2) (iv) of Service Tax (Determination of Value) Rules, 2006 will apply only to monetary loan and not to loan given in the form of gold. The order of the Tribunal in the case of Muthoot Financiers Pvt. Ltd. does not examine the scope of Rule 6 (2) (iv) of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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