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2014 (11) TMI 250 - CESTAT NEW DELHIValuation of service - Whether commitment charges recovered by the Bank are to be added to the taxable service for charging service tax or these charges are to be treated as interest and no service tax was to be levied on such charges - Held that:- commitment charges are the Charges imposed on the client who decide not to draw the amount of loan that has been at their disposal. These charges are basically to compensate for the loss of interest that the bank would have earned if the customer had drawn money from loan account. It is seen that the charges are related to lending of money to the client and; in order to give limit/overdraft facility, the bank keeps the fund available for the same. Under such circumstances, it is evident that such charges are integrally connected with the lending which is a taxable service. Therefore, commitment charges cannot be separated from lending service. I, therefore, hold that the commitment charges are chargeable to service tax and the amount of ₹ 46,902/- is recoverable from them. - Decided against assessee.
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