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TMI Blog2019 (2) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... t of interest received in granting loans and financing services is exempted. By such Notification, service tax is required to be paid on a value equal to 10% of the total amount representing interest; balance 90% thus enjoys exemption from payment of service tax. The Show Cause Notice has been issued alleging that the appellant has to consider the 90% which enjoys exemption from payment of service tax as exempted services and include this value for arriving at the amount that has to be reversed - The formula prescribed in Rule 6(3A) also uses the word “exempted services” and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those services which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of taxable service of the appellant in the instant matter was exempted from the whole of service tax leviable thereon; hence, 90% of the taxable services are exempt from the whole of service tax leviable. Therefore, the said 90% value would be rightly covered within the definition of exempted services for the purpose of Rule 2(e) of the CCR, 2004. Accordingly, the adjudicating authority held that the said value which does not form part of the taxable services subject to service tax, automatically form part of non-taxable/exempted services in the said formula and in consequence, the value of exempted services for the factor E and F on the percentage will have to be worked out as proposed in the Show Cause Notice. Based on thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable services under factor F in the prescribed formula, however excluding the very same amount from the value of exempted services under factor E , namely, the numerator. Ld. AR submitted that the formula does not provide a pick-and-choose' proposition by the appellants; that there has to be consistency followed by the appellant in the manner of inclusion or non-inclusion of the said value. 5. Heard both sides. 6.1 The issue is with regard to the determination of the amount that has to be reversed by the appellants when common inputs/input services are used for providing output services. The appellants have maintained separate records with regard to the common inputs used for the exempted as well as taxable output services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and includes services on which no service tax is leviable under Section 66 of the Finance Act. 8.2 For Financial Leasing Services under Section 65(105)(zm), service tax is payable on a part of the value of such services and only 90% is exempted as per Notification No. 04/2006. Since service tax is payable on 10% of the value, it cannot be said that the services are wholly exempt from payment of service tax. The definition of exempted services uses the word exempt from the whole of the service tax . The formula prescribed in Rule 6(3A) also uses the word exempted services and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the amount to be reversed. The Notification supra exempts 90 per cent of the value of the taxable service forming or representing as interest. With this, the value of E in the above formula should be read as equal to declared exempted services plus 90 per cent of value of interest on loans. The appellant has pleaded that it has reversed the Cenvat credit attributable to the exempted services, which ultimately matched with its ST-3 Returns. 11. There is no dispute that the appellant should get the benefit of Notification which exempts 90% as held in the earlier Order of this Bench. We respectfully agree with that and direct the assessing officer to follow the directions contained in the above Order to this extent. Having sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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