Ramachandran Nair, J.

The first petitioner, an association of non-banking financial companies, and petitioners 2 and 3 it's members, have filed this Writ Petition challenging the constitutional validity of Section 137 of the Finance Act, 2001 by which service tax is introduced on "banking and other financial services" which includes "equipment leasing and hire purchase". The provisions providing for service tax on equipment leasing and hire purchase transactions are introduced by amending the Finance Act, 1994. The relevant definition clauses introduced therein are extracted hereunder for easy reference.

"S.65(12) "banking and other financial services" means --(a) the following services provided by a banking company or a financial institution including a non- banking financial company or any other body corporate or commercial concern namely:-

(i) financial leasing services including equipment leasing and hire-purchase;

Explanation: For the purposes of this item, "financial leasing" means a lease transaction where-

(i) contract for lease is entered into between two parties for leasing of a specific asset;

(ii) such contract is for use and occupation of the asset by the les