Custom, Excise & Service Tax Tribunal
M/S Electronica Finance Ltd vs Cce, Pune-Iii on 3 March, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. ST/91/12-Mum (Arising out of Order-in-Appeal No. PIII/RS/338/2011 dated 30.11.2011 passed by the Commissioner of Central Excise (Appeals), Pune-III.) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ===================================================== M/s Electronica Finance Ltd. Appellant Vs. CCE, Pune-III Respondent Appearance: Shri Kaustubh Khairnar, Advocate for Appellant Shri S.L. Karolia, Assistant Commissioner (A.R.) for Respondent CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 03.03.2016 Date of Decision: 03.03.2016 ORDER NO. Per: M.V. Ravindran:
This appeal is directed against Order-in-Appeal No. PIII/RS/338/2011 dated 30.11.2011 passed by the Commissioner of Central Excise (Appeals), Pune-III.
2. Heard both sides and perused the records.
3. The issue involved in this case is regarding the demand of differential Service Tax liability on the appellant during the period October, 2005 to July, 2008. On finding that appellant is required to discharge Service Tax liability on the interest on hire purchase contract entered by them based upon the Service Tax rate as prevalent during the entire period of hire purchase agreement, while it is the case of the appellant that the Service Tax liability rate is considered on the date of entering into agreement with the client and the said Service Tax liability is factored in the EMI that is fixed for their client. Learned Counsel submits that the issue is no more res integra as this Bench in his own case vide Final Order No. A/192/14/CSTB/C-I dated 28.02.2014 has held that Service Tax liability will be on that rate which was prevailing in the entire hire purchase of the agreement. It is submitted that the judgement is reported at 2014-TIOL-794-CESTAT-MUM and produced a copy of the said order of the Tribunal.
4. On consideration of the submissions made by both sides and perusal of the records, we find that the issue is whether the Service Tax liability needs to be discharged by the appellant as per the prevailing Service Tax rate during the entire period of hire purchase of contract. It is undisputed that the appellant is in lease finance business and has discharged the Service Tax liability at the applicable rate when they entered into contract with their client on hire purchase agreement. We find that in this Bench that the appellants own case by an Order dated 28.02.2014 for the earlier period held as under:-
Heard both sides. The appellant filed this appeal against the impugned order. The brief facts are that the appellant is lease finance company and providing finance lease and under the category of Banking and Finance Service. The demand is confirmed on the ground that lease agreement entered by the appellant prior to 2004 and appellant had not discharged the correct service tax liability. The contention of the revenue is that appellant had paid service tax @ 5% and 8% while appellant were required to pay service tax @8% and 10.2% prevailing at the time of providing the service.
2. The appellant relied upon the decision of Tribunal in the case of Art Leasing Ltd. vs. CCE 2007 (8) STR 162 = 2007-TIOL-1493-CESTAT-BANG. The contention is that in case of hire purchase contract the Tribunal held that the rate of service tax will be rate prevailing at the time contract is entered into. Hence the demand is not sustainable.
3. The contention of the revenue is that the rate of service tax levied is that rate which was prevailing with the lease rental is being paid and relied upon a finding of the lower authorities.
4. We find that this issue is settled by the order of the Tribunal in Art Leasing Ltd. (supra). The Tribunal held as under:-
"5. The Banking and Financial Services came under The Service Tax net w.e.f. 16.07.2001. At that time, CBEC issued clarification to the effect that in respect of Hire Purchase Contracts entered prior to 16.07.2001 and installments of which were received after 16.07.2001, there is no Service Tax liability. In our view, the same logic is applicable to the present case also. When the Hire purchase contract is entered, the taxable event occurs. We agree with the appellants that the installment payments are only obligations of the hirer. The finding of the Commissioner(Appeals) that the appellant continues to provide service during the payment of installments is not correct. Therefore, the rate of Service Tax will be the rate prevailing on the date on which the contract is entered into. Consequently, the demand of differential amount applying the higher rate, which came into effect from 14.05.2003, will not be applicable in respect of the contacts entered prior to that date Hence, we set aside the impugned order and allow the appeal with consequential relief, if any."
5. We find the ratio of the above decision is fully applicable in the facts of the said case. In view of the above, appeal is allowed and impugned order is set aside.
5. We find no reason to deviate from the view already taken by the Bench in the appellants own case on identical issue.
6. Accordingly, we hold that the impugned order is unsustainable and liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief if any.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 4 APPEAL NO. ST/91/12-Mum