BANSWARA SYNTEX Vs. CCE

JUDGEMENT

(1.) THE issue involved in this appeal is whether the land, building as well as machinery leased out by M/s Banswara Syntex Ltd to M/s Banswara Fabrics Ltd shall be financial lease falling under the class other financial services under Section 65(12) of the Finance Act, 1994 read with the charging proviso under Section 65(105)(zm) of the said Act to levy service tax on the appellant.

(2.) BRIEFLY , the facts of the case suggest that the appellant had leased out its factory with the plant and machinery for a period of three years on payment of rent of Rs. 1 lakh per month. For the consideration so received, both the authorities below have held that the appellant being a limited company falls under the category of Body Corporate and since a body Corporate falls under Section 65(12) of the Finance Act, 1994, the appellant is said to have provided financial services through leasing. Definition of the term 'body corporate' is given under Section 65(14) of that Act and meaning of such term given by Companies Act, 1956, has been adopted by the Finance Act, 1994. The authorities were of the view that the plant and machinery including the factory building leased out to the appellant was a financial leasing under the definition of financial services under Section 65(12) of the Finance Act, 1994.

(3.) LEARNED DR Shri Vijay Kumar submits that the leasing of the equipment and factory shall be falling under the category of Banking and other Financial Services for which the Board has already issued clarification. According to the Boards clarification in letter F. No. B.II/1/200 -TRU dated 9.7.2001 not only Banking and Financial institutions providing leasing services are brought to the tax ambit but equally body corporate carrying out such activities are also brought to the purview of law. According to the meaning of body corporate, a public limited company shall also be falling under the defined category providing leasing service shall be liable to service tax. Present appellant is therefore, liable to pay service tax on the activity of other financial services which is leasing.