CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE REGIONAL BENCH - COURT NO. 2 Service Tax Appeal No. 23686 of 2014 (Arising out of Order-in-Original No.43/2014 dated 09.09.2014 passed by the Commissioner of Service Tax, Bangalore.)

M/s. Amalgamated Bean Coffee Trading Company Limited Appellant(s)

Coffee Day Square, Vittal Mallya Road, Bangalore – 560 001.

VERSUS The Commissioner of Service Tax Respondent(s)

Above BMTC Bus Stand, Domlur, Old Airport Road, B angalore – 560 071.

APPEARANCE:

Shri Vishnu Murthy, Chartered Accountant for the Appellant Shri Akshay Kumar, Superintendent, Authorised Representative for the R espondent CORAM:

HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL)

HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20873 / 2025 DATE OF HEARING: 06.06.2025 DATE OF DECISION: 25.06.2025 PER : P.A. AUGUSTIAN The issue involved in the present appeal is regarding wrong utilization of CENVAT credit to discharge service tax liability under Reverse Charge Mechanism (RMC) and on Goods Transport Agency (GTA) services. On receipt of GTA services, appellant had paid service tax of Rs.20,82,932/- under RCM. During audit, the above said omission was brought to the notice of the appellant and immediately, the appellant rectified the same by paying said amount by cash. However, the adjudicating authority by the impugned order confirmed demand being wrongly availed CENVAT credit by invoking the proviso to Section 73(1) of the Finance Act, 1994. It is further alleged that while the appellant had paid loan processing fee to various Banks and Financial Institutions under the category of interest and considering it as availing service, demand of Rs.69,70,861/- was demanded under RCM and also imposed penalty by invoking Section 78 of the Act. The adjudication authority also confirmed the said demand and also imposed penalty. Aggrieved by the said order, present appeal is filed.

2. When the appeal came up for hearing, learned advocate for the appellant submitted that as regarding allegation of ineligible CENVAT credit, the allegation is prima-facie unsustainable and notice issued under Section 73(1) is not applicable. There is no allegation that the appellant had availed ineligible CENVAT credit and the only allegation is that the appellant had utilized the CENVAT credit for payment of service tax on GTA service under RCM and even after it is considered as wrong payment, the proper course to be adopted is to proceed against the appellant under Section 84 of the Finance Act, 1994 and not by invoking the proviso under Section 73 as is done by the adjudicating authority. Further, it is submitted that immediately when the above lapse of wrong availment of CENVAT credit was brought to the attention of the appellant, they paid the amount by cash. Fact being so, confirming the amount with interest and penalty is unsustainable.

2.1 Regarding the demand on loan processing fee, the learned advocate submitted that at the relevant time loan processing fee was on positive list basis and further loan processing was not included under the taxable category of ‘Banking and other Financial Service’. The learned advocate also drew our attention to definition of Section 65(12) of the Finance Act, 1994 and submitted that interest was not defined under Finance Act 1994 and as per Section 2(29a) of the Income Tax Act 1961, the definition of interest includes loan processing fee. Fact being so, interest cannot be considered as value of taxable services as per Rule 6(2) of Service Tax (Determination of Value) Rules, 2006. Accordingly, the entire demand confirmed by the adjudicating authority is unsustainable.

3. With regard to demand against wrong availment of CENVAT credit, learned Authorised Representative (AR) for the Revenue fairly admits that appellant had reversed the CENVAT credit by paying the due amount by cash. However, there is no evidence produced by the appellant that they have paid the amount with interest. Fact being so, the impugned o