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TMI Blog2024 (8) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority to examine the claim of excess payment made by the appellant as reflected in the table reproduced. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. Rs.98,33,759/- has been confirmed towards non-payment of service tax on Finance Leasing/Hire Purchase income - HELD THAT:- This demand has been confirmed under the category of the taxable service 'Finance Leasing/Hire Purchase' u/s.65(12)(a)(i) of the Finance Act, 1994.However, the appellant claimed that this income pertains to Interest on Loan' which is exempted from payment of service tax. It is observed that the contract is for lending of money for acquiring any asset and not for lease of any specific asset, their use and occupation. Terms of payment is calculated to cover the money borrowed and interest thereon and not for to cover full cost of asset together with interest charges as the money borrowed may or may not cover the full cost of asset. The borrower is entitled and becomes owner of the asset immediately on purchase of the asset with the help of borrowed money and he need not wait till the lease period comes to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CENVAT Credit for the period from October 2011 to March 2012 to the next return period. The service tax liability, including Education Cess and Higher Education Cess, of Rs.85,263/-, has been paid by the appellant by utilizing the aforesaid CENVAT Credit of Rs.8,21,910/-. The appellant claimed that they have not carried forward the balance credit. This fact also needs to be verified. Thus, the issue is to be referred back to the adjudicating authority to examine the factual position. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. However, the appellant is liable to pay back credit of Rs.85,263/- which has been wrongly utilized by them. Penalty - HELD THAT:- It is observed that they have regularly paid their service tax liability as per books of accounts and as per the Provisions of Finance Act, 1994, as amended. None of the conditions precedent for imposing penalty under section 78 of the Finance Act, 1994 read with Rule 15 of CENVAT Credit Rules, 2004 as amended, are applicable in the case of the appellant. Accordingly, no penalty is imposable on the appellant. Hence, we set aside the penalty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax payable on actual taxable service Rs.10,77,435.00 D. Service Tax actually paid Rs.12,29,704.00 E. Excess payment Rs.1,52,269.00 As per the above chart submitted by the appellant, there is no short payment of service tax. Accordingly, they submit that the demand confirmed on this count is not sustainable. 2.2. Non-payment Service Tax of Rs. Rs.98,33,759/-. In the Show Cause Notice, it has been alleged that part of appellant's earning called Interest on Loan' would come under the purview of 'Finance Leasing/Hire Purchase' u/s.65(12)(a)(i) of the Finance Act, 1994 and demand of service tax of Rs.98,33,759/- has been confirmed under this category, in the impugned order. The appellant submits that the observations given in the Show Cause notice and the impugned order are grossly wrong, illegal and misunderstanding of the provision of section 65(12)(a)(i) of the Finance Act, 1994; the contract is for lending of money for acquiring any asset and not for lease of any specific asset, their use and occupation; the terms of payment is calculated to cover the money borrowed and interest thereon and not for covering full cost of asset together with interest charges a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1994, as amended; interest on loan for lending money falls under Banking and Other Financial Services u/s.65(105)(zm) of the Act and is exempt and no service tax is payable thereon. Accordingly, they submit that the demand of service tax confirmed on this count is not sustainable. 2.5. In support of their contention, the appellant relied on the decisions of the Tribunal, in the case of Kusalava Finance Ltd. V. CCE ST, 2008-TIOL-397; (2008) 10 STR 150 (Tri-Bang), (2010) 19 STR 175 (S.C.) , wherein the Hobble Apex Court has held that hire purchase finance is different from hire purchase since in the financing arrangement, the ownership in the goods remains with the hirer and not with the organization which finances the purchase. Thus they contend that the activity of the 'hire purchase finance' is not chargeable to service tax as the activity of 'hire purchase'; the Hon ble Supreme Court also maintained this view and dismissed the appeal filed by the Revenue in this matter. In support of their argument, the appellant also cited the decision in the case of Kerala Transport Dev. Finance Corporation Ltd. V. CCE (2007)8 STR 302 (CESTAT-Bang)2007 11STJ 197 (CESTAT-Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere explained and sample invoices were produced but the Ld. Commissioner arbitrarily ignored the same on the ground that all invoices were not produced. The Ld. Commissioner, Kolkata has neither asked for any further evidence/documents/clarification nor gave any further opportunity to produce any additional evidence/documents to substantiate appellant's claim though all supporting documents are in possession of the appellant. b. CENVAT Credit of Rs.22,60,357/- for the year 2010-11 and of Rs.17,48,644/- for the year 2011-12 totally amounting to Rs.40,09,001/- The appellant submits that they have never availed and claimed the CENVAT Credit of Rs.22,60,357/- for the year 2010-11 and of Rs.17,48,644/- for the year 2011-12 as alleged. The said CENVAT amounts were related to service tax charged by State Bank of India for rendering service in respect of Food Credit Consortium. Though CENVAT Credit of Rs.22,60,357/- for the year 2010-11 and of Rs.17,48,644/- for the year 2011-12 are recorded in the books of account, those CENVAT amounts were never availed and claimed by the appellant, and as such the appellant had not shown the same in ST-3 return for the respective period. 3.3. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 9. Regarding the confirmation of demand of Rs.4,97,545/-, the appellant submitted that there was no short payment; the findings of the ld. adjudicating authority in the impugned order are based on wrong method of calculation adopted by the auditing officials. The appellant gave a comparative chart showing the figures as adopted by the auditing officials and confirmed by the Ld. Commissioner, and the figures as per audited statement of accounts of the relevant period. We observe that the ld. adjudicating authority has not given any finding in the impugned order on the above submissions made by the appellant. Thus, we find that the issue is to be referred back to the adjudicating authority to examine the claim of excess payment made by the appellant as reflected in the table reproduced in paragraph 2 (supra). Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. 9.1. Regarding non-payment Service Tax of Rs.98,33,759/-, we observe that this demand has been confirmed under the category of the taxable service 'Finance Leasing/Hire Purchase' u/s.65(12)(a)(i) of the Finance Act, 1994.However, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrower purchases the assets with the help of the borrowed money and ownership and title of the asset immediately passes on to the borrower, and also remains with the borrower at all times and it never lies with the lender, and the lender has no control over the said asset, and the borrower has not to wait till payment of last instalment to become the owner of the assets. The borrower immediately after purchase of the assets enjoys all risks and rewards associated with that asset irrespective of the fact whether he has repaid the borrowed money or not. Loans are secured by hypothecation and first charge created on the assets purchased with the borrowed money. The borrower simply pays interest for the money borrowed together with principal amount. Moreover, the appellant bank does not pay as loan the full cost of the assets and part of the cost of acquisition of the asset is borne by the borrower. 9.1.5. Thus, we hold that the contract entered in this case is meant for lending of money and not for leasing or hire purchase. Accordingly, we hold that the demand of service tax confirmed in the impugned order on this count is not sustainable and hence the same is set aside. 10. Regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period from October 2011 to March 2012 to the next return period. However, the appellant claimed that they continued to record the CENVAT Credit for service tax charged by State Bank of India separately in their books of account, but paid full amount of service tax without any deduction for CENVAT Credit. 10.3. We observe that service tax liability, including Education Cess and Higher Education Cess, of Rs.85,263/-, has been paid by the appellant by utilizing the aforesaid CENVAT Credit of Rs.8,21,910/-. The appellant claimed that they have not carried forward the balance credit. This fact also needs to be verified. Thus, the issue is to be referred back to the adjudicating authority to examine the factual position. Accordingly, this issue is remanded back to the adjudicating authority to give a clear finding on the claim made by the appellant. However, we hold that the appellant is liable to pay back credit of Rs.85,263/- which has been wrongly utilized by them. 11. Regarding the penalty imposed in the impugned order, we observe that they have regularly paid their service tax liability as per books of accounts and as per the Provisions of Finance Act, 1994, as amended. None ..... X X X X Extracts X X X X X X X X Extracts X X X X
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