KARUR VYSYA BANK LTD. Vs. C.C.E.

JUDGEMENT

(1.) COUNSEL submits that it is the interest income of the Bank that has been taxed in the present adjudication even though there were no service charges received in this regard. According to law if any taxable service is provided and consideration received therefrom, that is only exigible to service tax. Therefore the adjudication is ill -founded which has taxed interest income without provision in that regard in the Finance Act, 1994 (hereinafter referred to as the Act).

(2.) REVENUE seriously opposes above proposition of the appellant on the ground that the hypothecation is also a banking service. Even leasing of the equipments and the goods shall be covered by the banking and financial services. Therefore, any amount received other than the recovery of principal amount shall be liable to service tax reading provision of section 65(105)(zm) combinedly with section 65(105)(12)of the Act. He further submits that loan and hypothecation are different. Therefore any consideration received from hypothecation is taxable by the above said taxing entry.

(3.) ADJUDICATION order reveals that emphasis of the adjudicating Commissioner was to tax interest received by the appellant from hypothecation of vehicles/machineries and other equipments for the above period constituting the taxable value.