SERVICE TAX ON LEASING SERVICES GETS SC NOD

The Supreme Court has held that banks and financial institutions, including non-banking financial companies (NBFCs), are liable to pay service tax on transactions of leasing and hire purchase of moveable goods. While bringing such service within the service tax net, a Bench headed by chief justice SH Kapadia has upheld the levy of service tax on hire purchase and leasing transactions, notwithstanding that the same transactions are chargeable to the sales tax (now VAT). The decision in effect has upheld the double taxation of the same transaction of hire purchase and leasing to both the service tax as well as the VAT.