ORDER
P.G. Chacko, Member (J)
1. The appellants are rendering ATM-related services to their customers who are banks and banking institutions, ever since such services were specified under Section 65 of the Finance Act, 1994 for payment of Service Tax (1-5-2005). The total period of dispute in these appeals is 16-8-2002 to 31-3-2005, for which the lower authority has demanded Service Tax of Rs. 2,68,68,830/- on the ground that the services rendered by them during the said period were in the nature of “Banking and other Financial Services” defined under Section 65(11) of the above Act. This provision reads as under:
65 (11) “banking and other financial services” means, the following services provided by a banking company or a financial institution including a non-banking financial company of any other body corporate, namely:
(i) financial leasing services including equipment leasing, and hire-purchase by a body corporate;
(ii)…
(iii)…
(iv)…
(v)…
(vi)…
(vii) provision and transfer of information and data processing.
Learned Commissioner recorded a finding that the appellants installed ATMs at their cost and leased the machines to their customer-banks and also provided electronic connectivity for operation of the machines and collected monthly charges referred to as ‘facility charge’ for all these services. It was found that the ATMs were owned by the appellants all throughout. These crucial findings contained in para 11.6 of each of the impugned orders are not under challenge. It is on this basis that learned SDR has endeavoured to canvass for “equipment leasing”, one of the services specified as ‘banking and other financial services’ under Section 65(11) ibid. This argument has been opposed by learned Counsel who has argued that, for levy of Service Tax on “equipment leasing”, the service should be shown to be a financial leasing service. According to her, the leasing of ATMs by the appellants to their customer-banks has not been shown to be a ‘financial leasing service’ in the show-cause notices or in the impugned orders. In this connection, reliance has been placed on literature allegedly taken from the Institute of Chartered Accountants of India. However, it appears from the memoranda of appeals that no such literature has been cited by the appellants. There is a reference to the “Council of Chartered Accountants” in the appeal memoes, but this cannot be accepted as a reference to the Institute of Chartered Accountants of India. Learned Counsel has also relied on a letter of the Government in support of her argument that “equipment leasing” is not a financial leasing service. But what is discernible from this letter is that ‘financial leasing’ includes equipment leasing and hire-purchase also. The subject matter of this letter seems to be only quantification of Service Tax. Hence this letter does not appear to support the appellants, for the present purpose. From the definition of “banking and other financial services” appearing in Section 65 of the Finance Act, 1994, it appears to us that ‘equipment leasing’ provided by any body corporate is a taxable service. Admittedly, the appellants are a body corporate and the service rendered by them to their customer-banks, admittedly, includes equipment leasing. Another point put forward by learned Counsel is that ATM-related services were introduced for the purpose of levy of Service Tax for the first time on 1-5-2006 and, therefore, the services rendered by the appellants prior to that date should not be held to be taxable services. In the face of this argument, it is submitted by learned SDR that, as a matter of fact, the appellants had obtained registration with the department for “banking and other financial services” well before the period of dispute. Learned Counsel submits contextually that this was done by mistake and that an application for de-registration was subsequently filed with the department. She has also pleaded time-bar against the demand of tax. It is submitted that both the show-cause notices were issued beyond the normal period of limitation and that no allegation was raised in any of the notices for invoking the extended period of limitation. This plea has been opposed by learned SDR.
2. After considering the submissions, we are of the view that no prima facie case has been made out on merits by the appellants against the demand of Service Tax inasmuch as, apparently, the leasing of ATM fell within the definition of “banking and other financial services” given under Section 65(11) of the Finance Act, 1994 during the period of dispute. It is also pertinent to note that the appellants had applied for and obtained, on their own accord, registration from the department for the said services. It was only towards the end of the period of dispute that they applied for de-registration. Thus, for the period of dispute, the appellants were liable to pay tax to the exchequer in respect of the services for which they were registered with the department. Learned Counsel has pointed out, at this stage, that, if that be so, the appellants have a good case against the quantum of tax demanded. It is submitted that many numerical factors which were not to be included in the assessable value for levy of Service Tax were erroneously included by Commissioner. According to learned Counsel, if the tax is quantified correctly, the liability of the appellants would stand reduced to around Rs. 65 lakhs.
3. We have also considered the plea of limitation. It is seen that the show-cause notices invoked Section 73 of the Finance Act, 1994 for demanding Service tax for the extended period. Learned Counsel has not been able to establish that the larger period was wrongly invoked.
4. There is no plea of financial hardships in these applications.
5. Having taken into account all submissions, we direct the appellants to pre-deposit an amount of Rs. 65 lakhs (Rupees Sixty-five lakhs only) within 6 weeks. Report compliance on 4-1-2007.
(Dictated and pronounced in open Court)