2021-TIOL-365-HC-MUM-ST
CCGST & CE Vs Shriram Transport Finance Company Ltd
ST - Substantial question of law is whether for the period prior to 01.03.2006, service tax is recoverable on entire interest component collected as equated monthly installment on transactions relating to "Financial Leasing Services including equipment leasing and hire-purchase", in absence of any mechanism to bifurcate the processing or management charges - Tribunal order dated 29.05.2018 is challenged by Revenue - Tribunal held that recovery of tax on interest for the period prior to 1 st March 2006 is without authority of law as there is a presumption of attributing the entire amount to interest .
Held:
+ Explanation 1 to section 67 of the Finance Act prior to 18.04.2006 contained a specific exclusion vide sub clause (viii) excluding interest on loans.
+ Though section 67 was substituted by Finance Act 2006 w.e.f. 18.04.2006, the corresponding Service Tax Determination of Value Rules 2006 vide rule 6(2)(iv) again excluded interest on loan from the purview of valuation of taxable services.
+ However, the Board vide circular No. 80/10/2004-ST dated 17.09.2004 clarified that interest on loan would stand excluded.
+ Respondent has been discharging service tax regularly on processing charges and also filing returns regularly. Respondent gives loan to its customers / borrowers for the purpose of hire purchase agreement for purchasing the vehicles and this lending is in the nature of a loan.
+ Since it is in the nature of loan, consequently interest on loans stands excluded from the value of taxable services. Board circular dated 09.07.2001 referred to by the appellant in fact supports the case of the respondent.
+ In view of the settled law and in exercise of the legislative and rule-making power once Parliament has excluded interest on loans from the purview of taxable service, it is not open to the authority to hold that the exemption notifications would not apply.
+ Further in view of the decision of the Apex Court in the case of Association of Leasing and Financial Service Companies and Bajaj Auto Finance Ltd. ( 2008-TIOL-120-SC-ST ) re-affirming the legal position that the respondent is not liable to pay service tax in respect of the interest on loan advanced as the same stands excluded from the purview of the taxable services, we find no reason to interfere with the impugned order.
+ CESTAT was correct in holding that for the period prior to 01.03.2006 interest on loan is not taxable in the absence of mechanism for bifurcation of service. Therefore, recovery of service tax on interest for the period to 01.03.2006 is without authority of law as there is a presumption of attributing the entire amount to interest in the absence of any mechanism to isolate the processing or management cost even if that were collected by way of equated monthly instalment.
+ CESTAT has returned a clear finding that hire purchase is but loan and that hirer obtains goods from the seller and the banking and financial institution finalised the purchase of the goods with the title firmly resting with the hirer / with the financial institution vested with the right to acquire possession of the goods through judicial intervention.
+ No error or infirmity in the view taken by the CESTAT qua the ground raised by the appellant.
- Appeal dismissed: BOMBAY HIGH COURT
2021-TIOL-364-HC-KAR-ST
Pr.CST Vs IBM India Pvt Ltd
ST - Revenue is in appeal against the order of CESTAT holding that Software repair and maintenance service is taxable with effect from 01/06/2007 when the definition of maintenance and repair service was expanded to include computer software within 'goods'; that the demand related to period prior to expansion of definition is unsustainable and is clearly barred by limitation - respondent has referred to decision of the High Court of Madras in KASTURI AND SONS VS. UNION OF INDIA' = 2011-TIOL-240-HC-MAD-ST and submitted that the issue involved in this appeal is no longer res integra and in any case, the demand raised by the appellant was barred by limitation.
Held: Counsel for the appellant Revenue was unable to point out that the aforesaid decision (supra) was challenged before the Supreme Court by the appellant - It is also pertinent to mention here that in para 17 of the aforesaid judgment, the stand of the appellant has been recorded, which reads - “While it is admitted by the respondents in the counter affidavit that there has been exemption in respect of maintenance of computer software prior to 2006, it is not even their case that in 2007, when the amendment was brought in the Finance At, it was given retrospective effect and even the altered definition of the term 'goods' in the amendment of 2007 in the Finance Act, 1994 under Section 65(105)( zzg ) also was not given retrospective effect and hence, it cannot be said that the impugned circular attempts to give effect to the provisions or explains the changes proposed in the Finance Act, 2005.” - Thus, admittedly as per the stand taken by the respondent themselves before the High Court of Madras, it is evident that activity of maintenance of computer software was exempt from the provisions of the Act prior to 2006 - Bench is in agreement with the view taken by the High court of Madras - It is pertinent to mention that in the show cause notice itself no allegations of fraud collusion, misstatement or suppression of facts have been stated against the respondent, therefore, the demand is barred by limitation under Section 73 of the Finance Act, 1994 as well - Substantial questions of law are answered in against the appellant and favour of the respondent - No merit in Revenue appeal, hence same is dismissed: High Court [para 6, 7]
- Appeal dismissed: KARNATAKA HIGH COURT
021-TIOL-359-HC-MAD-CUS
CC Vs Pitchai Karuppiah
Cus - Department has challenged the impugned order passed by the 2nd respondent Revisionary Authority permitting re-export of 624 gram of jewelry brought by the 1st respondent on payment of redemption fine of Rs.2,14,935/- with a personal penalty of Rs.50,002/- - Department seeks restoration of O-in-O. Held: 1st respondent is unable to confirm as to whether the officer who passed the impugned order was incompetent or not, therefore, without expressing any opinion on the merits of the case, the impugned order is set aside and the case is remitted back to the 2nd respondent to pass a fresh order after hearing the petitioner with a caveat - If the impugned order passed by the 2nd respondent was passed by an officer having appropriate qualification and competency, the 2nd respondent shall pass an order confirming the impugned order in the remand proceedings without any further deliberation - On the other hand, if the 2nd respondent who passed the impugned order had lacked the competency, the case shall be re-heard on merits by the second respondent with a person having competence - Writ petition stands allowed: High Court [para 4 to 7]
- Petition allowed: MADRAS HIGH COURT
2021-TIOL-88-CESTAT-AHM
Parthiv VijayKumar Dave Vs CC
Cus - Appellant is in appeal against letter dated 15.11.2019 whereby, the request of Cross-Examination of Three Officers of DRI and one Mr. Bhaskar Bhatt, Chartered Engineer has been denied by Commissioner in context with the SCN issued amongst other to the appellant - As per the facts in SCN, the report given by Shri Bhaskar Bhatt, Chartered Engineer has been relied upon - Since this witness is 3rd Party, as far as appellant is concerned the Cross- Examination of Shri Bhaskar Bhatt, Chartered Engineer must be allowed to the appellant as mandated under section 138B of the Customs Act, 1962 - It is mandatory on the part of adjudicating authority to allow the Cross- Examination of Shri Bhaskar Bhatt, Chartered Engineer in terms of section 138B - As regard to the appellant seeking Cross- Examination of three DRI Officers, the reason given by appellant that the officer have recorded the statement under duress threat and pressure is not convincing - It is up to the witnesses whose statements were recorded to dispute this charges, if anything exist - As regard the charge of inflation of value multifold, the appellant has all the right to challenge it on the basis of document and the same can be discarded if valuation done by DRI Officers is incorrect therefore, there is no need of Cross-examination of DRI Officers - The DRI Officers have performed their duty as required in the law - Since the revenue as well as the appellant have filed early hearing application and shown the urgency in the case, Adjudicating Authority is directed to complete the adjudication process by following the Principles of Natural Justice and pass the order within a period of 3 months: CESTAT
- Appeal partrly allowed: AHMEDABAD CESTAT
2021-TIOL-87-CESTAT-KOL
LGW Ltd Vs CCGST & CE
ST - COD - Mere filing of an application signed by Authorized Signatory of appellant company does not serve the purpose for condoning such delay, wherein no plausible reason has been mentioned in application for such an excessive delay - In the absence of any justifiable reason, Miscellaneous Applications (COD) cannot sustain: CESTAT
- Misc application rejected: KOLKATA CESTAT |
