Case Law Details

Case Name : TVS Finances and Services Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)
Appeal Number : ST Appeal No. 00561 of 2010-DB
Date of Judgement/Order : 30/01/2020
Related Assessment Year :
Courts : All CESTAT (1012) CESTAT Chennai (138)

TVS Finances and Services Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)

The appellant is providing financial services and gives loans. For recovery of loans, the appellant collects post-dated cheques. There are instances when post-dated cheques after being presented to bank get dishonoured. The bank collects charges for dishonouring of the cheques. Such charges are recovered by the appellant from their clients. It appeared to Revenue that such charges should be included in the assessable value for levy of service tax. Therefore, proceedings were initiated which culminated into passing of the impugned order.

CESTAT have considered the submissions from both sides. On perusal of records, CESTAT note that there is dispute with the amount collected by the appellant from their clients is equal to the amount that the appellant pays to the bank due to dishonouring of cheques. Therefore, CESTAT are satisfied that the said expenses are reimbursable expenses. CESTAT , therefore, by applying the rule of Hon’ble Supreme Court in the case of M/s. Intercontinental Consultants and Technocrats Pvt. Ltd.,(supra) hold that the demand against the appellant is not sustainable. CESTAT , therefore, set aside the impugned order and allow the appeal with consequential relief, if any, to the appellant.

FULL TEXT OF THE CESTAT JUDGEMENT

The appellant is providing financial services and gives loans. For recovery of loans, the appellant collects post-dated cheques. There are instances when post-dated cheques after being presented to bank get dishonoured. The bank collects charges for dishonouring of the cheques. Such charges are recovered by the appellant from their clients. It appeared to Revenue that such charges should be included in the assessable value for levy of service tax. Therefore, proceedings were initiated which culminated into passing of the impugned order. The period involved is From Sept.’04 to Jun.’09. The provision of law that was invoked for raising the demand was Rule 5(1) of Service Tax [Determination of Value] Rules, 2006. The demands were confirmed and aggrieved by the same, the appellant is before this Tribunal.

2. Heard the learned counsel Ms. K. Nancy on behalf of the appellant. She has submitted that the appellant has recorded only as much amount received from the clients as much is demanded by banks for dishonoured cheques. Therefore, the said amounts are reimbursable expenses. In this regard, she has relied on the ruling of Supreme Court in the case of Union of India Vs M/s. Intercontinental Consultants and Technocrats Pvt. Ltd., reported in 2018 (10) G.S.T.L.401 (S.C.) and argued that the Hon’ble Supreme Court have struck down the provisions of sub-rule (5) being ultra vires of section 67 of the Finance Act, 1994.

3. The learned Authorised Representative Ms. K. Komathi aggrieved that the issue is covered by the decision of Hon’ble Supreme Court. HE supported the findings in the impugned order.

4. I have considered the submissions from both sides. On perusal of records, we note that there is dispute with the amount collected by the appellant from their clients is equal to the amount that the appellant pays to the bank due to dishonouring of cheques. Therefore, we are satisfied that the said expenses are reimbursable expenses. We, therefore, by applying the rule of Hon’ble Supreme Court in the case of M/s. Intercontinental Consultants and Technocrats Pvt. Ltd.,(supra) hold that the demand against the appellant is not sustainable. We, therefore, set aside the impugned order and allow the appeal with consequential relief, if any, to the appellant.

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