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TMI Blog2014 (11) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as interest as interest means amount that accrued at pre-determined rate on the basis of time. All these charges were in the nature of penalty for denying/receiving the services which have already been agreed between the client and the Bank. Attention was also invited to a relevant definition and expression of 'taxable service' and Banking and other Financial Services as contained in of Section 65(12) of the Finance Act, 1944. Appellant also contested invocation of extended time limit for raising demand in view of grant of benefit under section 80 for non-imposition of penalty under section 76, 77 & 78. 2. On the other hand, learned DR invited attention to the Hon'ble Tribunals decision in case of Housing & Development Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices were made taxable. 19.3 In the case of lease or hire purchase arrangements, Service Tax is leviable on lease management fee/processing fee/documentation charges (recovered at the time of entering into agreement) and on the finance/interest charges (recovered in equated monthly installments). The clarification was given in respect of finance/interest charges which was recovered in equated monthly installments after the date of agreement since other charges are recovered at the time of agreement itself. The logic behind the subsequently in the form of equated monthly installments, the date of agreement would be considered as the date of rendering service though charges are recovere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax, appellant should have intimated the fact to the Department and checked up whether such collection of amount in relation to lending would be liable to tax or not. It is settled law that Government is not Government and it has to be taken note that even Government departments make the payments for the services received from another department. Telecommunication department used to provide telecommunication services to other departments and other departments paid for the telecom service rendered and even for the service rendered by the Railways, Postal and other departments, payments are made. Therefore, the fact that the appellant is a wholly owned government company, does not mean that they need not have to follow the law of lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions made by the appellants in the appeal memorandum and during personal hearing. I observe that the 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 servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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