Indian Overseas Bank Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Interest earned on gold loans is taxable and does not fall within negative list as Section 66D(n) of the Act excludes interest earned only on monetary Loans and advances, but not to lending of Gold.
Revenue is of the opinion that only if the loan is in the form of Indian rupee and interest is earned on that, then alone under the provisions of Valuation Rules or Section 66D of Finance Act, 1994 interest is not to be treated as part of consideration for determination of service tax. We do not find any support from any of the provisions of law for such contention by Revenue. There is no provision in the law to hold that interest identified by Valuation Rules or Section 66 is interest only on cash loan. We therefore hold that service tax confirmed on interest earned by the appellant by providing metal as loan is not sustainable. We therefore set aside such demand on the interest with interest and penalty.
The Appellant is rendering safe-vault services to the Foreign Sellers. The Profit Margin is liable to service tax as it is the consideration for safe-keeping services rendered to the foreign suppliers
Revenue does not have any figure of the consideration alleged to have been received by the appellant from the foreign suppliers of gold for providing safe vault service which is very clear from the finding of the original authority in para 26 as reproduced above. We are, therefore, of the opinion that the Revenue did not have any case for raising demand of service tax on providing safe vault service on the appellant. The onus was on Revenue to identify the consideration, if any, received by appellant for providing service. Without any consideration there is no service tax payable. We therefore set aside the impugned orders for demand in all the appeals in respect providing Safe Vault Service and allow the appeals in respect of safe vault services.
FULL TEXT OF THE CESTAT JUDGEMENT
This appeal seeks the quashing of the order dated 27.11.2017 passed by the Commissioner (Appeals), by which the order dated 20.02.2017 passed by the Additional Commissioner confirming the demand of service tax with interest and penalty has been upheld, and the appeal has been dismissed.
2. M/s Indian Overseas Bank1 is a Nationalized Bank engaged in providing ‘Banking and Other Financial Services.’ The dispute in the present appeal relates to a demand of service tax levied for the period from 01.04.2014 to 31.03.2015 under the Finance Act, 19942. The details are as follows:
