KERALA STATE FINANCIAL Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THESE appeals have been filed against Orders -in -Appeal No. 9 and 10/2006 - ST/TVM both dated 21.12.2006 passed by the Commissioner of Central Excise (Appeals), Cochin.

(2.) THE appellant M/s. Kerala State Finance Enterprises Ltd. are rendering various types of financial services. As far as the present appeals are concerned, the period involved is from 12.9.2001 to 20.11.2004.

(3.) THE learned Advocate Ms. H. Vani who appeared for the appellants stated that the appellants have already been registered with the Central Excise department for payment of Service Tax under the category of "Banking and Other Financial Services". The present appeals relate to a particular financial service which is "lending". The appellants lend money for various purposes such as purchase of commercial vehicle, etc. It was urged that "lending" was brought under the Service Tax net only with effect from 10.9.2004. My attention was drawn to the relevant amendment. Therefore, she argued that the appellants would be liable to pay the Service Tax on "lending" only with effect from 10.9.2004 and not period prior to that date. The learned advocate stated that the Adjudicating Authority has actually categorized the service rendered by the appellant as "hire purchase by a body corporate" which is indicated under Section 65(11) of the Finance Act, 1994 of "Banking and Other Financial Services" in Sl. No. 1 of the definition as it existed in 2001. In view of the misunderstanding of the category under which the said services would fall, the Adjudicating Authority has held that the appellant is liable to discharge the Service Tax for the disputed period. It was strongly argued by the learned advocate that hire purchase is entirely a different activity and the appellant is actually paying Service Tax for the hire purchase service rendered by them. The main difference between a lending, hire purchase and lease was highlighted by the learned advocate in the following tabular column.