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TMI Blog2014 (12) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of maturity, they get full value of the amount of the invoice. Revenue is of the view that as they have discounted the invoice, the same does not form part of the interest, the same is commission earned by them for discounting the invoice. The revenue has termed this transaction as factoring i.e a financial transaction in which a business in need of funding sells its accounts receivable as discount. On that they are required to pay service tax. As per the Notification 29/2004-ST dated 22.09.2004, discount of bill is exempted from levy of service tax. The only contention of the revenue is that while discounting the applicant has earned commission. We have seen the said notification. As per the Notification, it deals only the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for finance against the government securities held by the Clearing Corporation of India Ltd. (CCIL)'. The CCIL is having collateral borrowing and lending obligation. As per the obligation any financial institution who is in need of money, pledge their securities with CCIL and CCIL ask from some banking and financial company who is having surplus money with them to lend the money to the borrower for certain period of time. Admittedly, if the value of the securities is ₹ 100/-, the lender shall pay certain amount e.g. ₹ 10/- as their charges for lending and remaining ₹ 90/- they lend to the borrower. For that CCIL issue a certificate certifying the amount of security amount lended and the charges. After the maturity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termed this transaction as factoring i.e a financial transaction in which a business in need of funding sells its accounts receivable as discount. On that they are required to pay service tax. 7. We have seen the Notification 29/2004-ST dated 22.09.2004. As per the said notification, discount of bill is exempted from levy of service tax. The only contention of the revenue is that while discounting the applicant has earned commission. We have seen the said notification. As per the Notification, it deals only the interest for lending the money for certain period of time. In the facts of the case, the discount is nothing but interest for lending the money. Therefore, the applicants have made out a case for complete waiver of pre-deposit on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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