TMI Blog2023 (2) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... 023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Shri P.C.Anand, Consultant - For the Appellant Shri S. Balakumar, Assistant Commissioner (A.R) - For the Respondent ORDER Brief facts of the case are that the appellant is a Non- Banking Financial Company and are engaged in the business activity of financing the purchase of commercial vehicles, cars, houses and also provide the services of Software Solutions, Business Process Outsourcing, Hire Purchase and Leasing including Equipment Leasing. They have obtained Service Tax registration for various categories of services. The appellant has a system whereby the customer who avails the loan / hire-purchase facility is permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 ST/647/2012 LTUC/294/2010-C dated 25.05.2012 Order in Original No.LTUC/269/2012 dt 29.8.2012 April 2010 to March 2011 1,07,86,682/- U/s 76 Minimum penalty: Interest u/s 75 3. It is submitted that the issue stands covered by the decision of the Larger Bench in the case of Commissioner of Service Tax, Chennai Vs REPCO Home Finance Ltd., - 2020 (42) GSTL 104 (Tri-LB). 4. Ld. A.R Shri S. Balakumar appeared and argued for the Department. 5. The issue is whether the Foreclosure charges collected by the banks and non-banking financial companies on premature termination of loas is subject to levy of service tax under Banking and Other Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g; (v) asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, but does not include cash management; (vi) advisory and other auxiliary financial services including investment and portfolio research and advice, advice on merges and acquisitions and advice on corporate restructuring and strategy; and (vii) provision and transfer of information and data processing; (b) foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); 48 . Section 65(12) was substituted with effect from 10 September, 2004 by adding two clauses which are as follows : (viii) banker to an issue services; and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and paid along with principal and interest up to the date of payment. Therefore, there is definitely an element of service involved in considering the request of the borrower for prepayment of loan, fixing of prepayment charges, collection of the same and closure of loan. These activities can be definitely in relation to Banking and other Financial Services, which includes lending after 10-9-2004. Further, when loans are foreclosed, the situation gives rise to the issue of asset liability mis-match for the lender since lender has to find alternative source for deployment of such funds. Prepayment charges are the charges leviable by a bank/lender to offset the cost of such finding such alternative source for deployment of fund and also inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench of the Tribunal in Hudco. Service tax cannot be levied on the foreclosure charges levied by the banks and non-banking financial companies on premature termination of loans under banking and other financial services as defined under Section 65(12) of the Finance Act. 54. The reference is, accordingly, answered in the following terms; Foreclosure charges collected by the banks and non-banking financial companies on premature termination of loans are not leviable to service tax under banking and other financial services as defined under Section 65(12) of the Finance Act. 6. Following the decision of the Larger Bench of the Tribunal, we are of the view that the demand cannot sustain and requires to be set aside which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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