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TMI Blog2015 (8) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... ce if the assignee himself acts as a servicer. We do not find any logic in taking a view that in such a situation assignee is not liable to pay tax. In the normal course when a loan is assigned, the consideration is paid by the assignee and that is the end. In this case the assignor collects the principal and interest and since they have received a loan from the bank equal to the amount or more than the amount of portfolio transferred, the assignee or the servicer pays the principal and the interest charged by the bank to the bank. In case where the servicer is a different person, the appellant will be simply paying back the loan with interest charged by the bank and will have nothing to do with the rural women who have received the loan. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These portfolios of loans are sold to other financial institutions by assigning the entire asset. The asset assignment is the mechanism by which the loan receivables of the appellant (assignor) are sold (assigned) to a third party for an immediate liquidation and this transaction is executed by way of Assignment Agreement . Once the loans are assigned, the assigned portfolio is treated as off the Balance Sheet of the appellant provided the risks and rewards are transferred. Considering one such Deed of Assignment between SKS and HDFC Bank Ltd., the same was examined. As per this deed, SKS has two roles namely the 'Assignor' and the 'Servicer' and HDFC is the 'Assignee'. As far as Assignor is concerned, the issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the Service Tax (Determination of Value) Rules. d) That consideration for acting as a servicer is identified in the agreements of assignment itself and cannot be discarded on any ground since the consideration is ascertainable in money. That in terms of Section 67 when the amount of taxable is ascertainable in money terms the said consideration is the value for the purposes of service tax. e) That consensus-ad-idem between the parties cannot be brushed aside. f) That when the transaction is an actionable claim, the interest accruing there from is also in the nature of an actionable claim and as such cannot be taxed. g) That the entire demand is barred by time. That the department in the year 2009 were aware of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as actionable claims. There are three possibilities when an actionable claim is sold or assigned or transferred. The first category is that the assigned portfolio is simply sold and the entire consideration is paid to SKS and the assignee takes over the portfolio and recovers the amount themselves. In this case when the assignee recovers the amount by its own effort, it will be self service and whatever profit is earned, there will be no tax liability on the assignee. The second possibility is after getting the assignment of portfolio, the assignee appoints a recovery agent, who, for a consideration as per the agreement recovers the amount and pays to the assignee. In such cases, person appointed, has to pay service tax as a provider of rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the bank. In case where the servicer is a different person, the appellant will be simply paying back the loan with interest charged by the bank and will have nothing to do with the rural women who have received the loan. 8. In view of the factual situation discussed above, we do not find that appellant has a prima facie case on merit. Nevertheless whether extended period could have been invoked and penalty could have been imposed will require more detailed consideration of all aspects of the matter which can be taken up at the time of final hearing. The learned counsel fairly admitted that the demand for the normal period would come to ₹ 3.5 Crores (Rupees Three Crores Fifty Lakhs approximately) and the financial position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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