Saturday, November 25, 2006

Service tax does not apply to finance Cos for hire & purchase

Auto finance companies are on a high. With sales of two and four wheelers heading upwards, these companies will never fall short of any clientele. They have one more reason to celebrate they may not be required to pay service tax on the entire basket of their services. In a case involving Bajaj Auto Finance, the Central Excise and Service Tax Tribunal (CESTAT) discussed the issue whether the appellant company that is engaged in hire purchase finance is liable to service tax or not. The revenue departments stakes involved are too high to comprehend nearly Rs 26 crore were demanded and confirmed along with penalties and interest by holding that the service rendered by the company is covered under the category banking and other financial services which inter alia means financial leasing services, including equipment leasing and hire purchase by a body corporate.

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