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TMI Blog2013 (12) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... rmity in the impugned order - as decided in National Oxygen Ltd. Vs. CCE Pondichery (2007 (4) TMI 41 - CESTAT, CHENNAI) reported in has held that the expression "any other body corporate" in the definition of "Banking and other financial service" must be read in ejusdem generis with the expression occurring prior thereto in the definition - there is no evidence to show that the lessee agreements cover 75% or more of the estimated economic life of the leased assets – Decided against the revenue. - ST/1732/2011-CU[DB] - FINAL ORDER NO.FO /56291/2013 - Dated:- 22-3-2013 - Archana Wadhwa And Rakesh Kumar, JJ. For the Appellant : Sh Nagesh Pathak, DR. For the Respondent : Sujit Ghosh, Adv. PER : Rakesh Kumar Facts giving rise to this appeal by the Revenue are, in brief, as under:- 1.1 The Respondent are engaged in providing aircraft parts/ equipment to various airlines on lease for a fixed period and on payment of fixed percentage of value of the parts/ components on leasing charges on monthly basis. The period of dispute in this case is from 2005-06 to May'2007. During this period 'banking and financial services' as defined in Section 65(12) of the Finance Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner's Order is not legal and proper, directed to Commissioner to file appeal against the same before the Tribunal for correct determination of certain points as mentioned in it. 1.4 In pursuance of the above Review order 01.08.2011 passed by the Committee of Chief Commissioners in terms of Section 86(2) of the Finance Act, 1994, this appeal has been filed by the Commissioner. 2. Heard both the sides. 3. Sh. Nagesh Pathak, ld. Departmental Representative assailing the impugned order and reiterating the grounds of appeal, pleaded that the appellant's activity is covered by the definition of "banking and financial services", as the same stood during the period of the dispute, that the activity of the appellant is finance lease, that during the period of dispute there was no definition of finance lease in Section 65(12) and as such there was no provision that finance lease must have a clause giving an option to a lessee to own the asset at the end of the lease period, that the explanation containing the definition of finance lease, added to Section 65(12) w.e.f. 01.06.2007 is a substantive amendment and the same would not have retrospective effect and as such the same wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... md.) where the dispute is in respect of period prior to 01.06.07, has held that Section 65(105) (zm) read with Section 65(12) covers only the Financial Lease as understood in ICAI accounting standards, that since there is no dispute that in term of the respondent's agreements with their customers, the customers had no entitlement or option to own the aircraft parts leased, these lease agreements are not finance lease agreement and hence outside the purview of section 65(105) (zm) read with 65(12) and that in view of these submissions, there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the records. The respondent are providing aircraft parts/ equipments to various airlines on lease for a fixed period on payment of monthly lease charges which are a fixed percentage of the value of the goods, leased. There is no dispute that the leasing agreements do not contain any provision entitling the lessee to own the goods leased or option to own goods leased at the end of the lease period, after making lease payment. 5.1 Lease is a contractual agreement calling for the lessee (user of the asset leased) to pay the lessor (owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional validity of levy of Service Tax or Financial Lease transactions, has, in para 20 of the judgment, distinguishing the Financial lease from operating lease observes as under:- "The point which needs to be reiterated is that the funding activity undertaken by the financing party which could be in form of loan or equipment leasing or hire purchase financing, would be exigible to service tax if such activity falls in the category of "banking and other financial services" under section 65(12) of the Finance Act, 1994. This Financial transaction was earlier out of the tax net. In the process, there are two different and distinct transactions viz; the financial transaction and the equipment leasing/hire purchase transaction. The former is exigible to service tax under section 66 of the Finance Act, 1994 (as amended) whereas the latter would be exigible to local sales tax/vat". In para 39 of the above judgment, the Apex Court has observed as under:- "As stated above, we are concerned with "Financial Leasing Services" which are sought to be taxed under section 65(12)(a)(i). The taxable event is indicated in Sec. 65(105)(zm). As stated above, the impugned provision ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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