Tribunal decision: Upheld demand of Rs. 16,99,443 with interest, set aside other service tax demands.

The Tribunal upheld the demand of Rs. 16,99,443/- with applicable interest, while setting aside the remaining demands related to service tax on renting of immovable property, sale of loan application forms, concessional interest charged under Seed Capital Assistance Scheme, and foreclosure charges for premature payment of loans. The Tribunal also ruled that service tax is leviable on annual service charges against Working Capital Term Loan. Penalties were waived due to the appellant's genuine belief and cooperation with the Department.

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Issues Involved:
1. Service Tax on renting of immovable property.
2. Service Tax on sale of loan application forms.
3. Service Tax on concessional interest charged under Seed Capital Assistance Scheme.
4. Service Tax on foreclosure charges for premature payment of loans.
5. Service Tax on annual service charges against Working Capital Term Loan.

Summary:

1. Service Tax on Renting of Immovable Property:
The appellant had already deposited the service tax as per the adjudication order. The Commissioner (Appeals) dropped the demand of Rs. 1,58,377/- for the period 01.06.2007 to 31.03.2009, which was accepted by the department. The appellant did not press the issue regarding the demand of Rs. 16,117/- for the period 01.04.2009 to 31.08.2009.

2. Service Tax on Sale of Loan Application Forms:
The learned counsel argued that the sale of loan application forms is not a service and thus not taxable. The Tribunal's order in the case of Sadhana Educational & People Development Services Pvt. Ltd. supported this view, holding that amounts collected for the sale of forms are not includible in the taxable value for service tax.

3. Service Tax on Concessional Interest Charged Under Seed Capital Assistance Scheme:
The appellant acted as an agent of IDBI for the Seed Capital Scheme, which carries a nominal service charge of 1% per annum for the first five years and interest at 10% per annum thereafter. The Tribunal noted that interest on loans is not taxable under the 'Banking and other Financial Services' category, thus the charges under this scheme are not liable to service tax.

4. Service Tax on Foreclosure Charges for Premature Payment of Loans:
The learned counsel argued that foreclosure charges are liquidated damages and not a consideration for any service. The Tribunal, referencing the Larger Bench decision in Commissioner of Service Tax, Chennai Vs. Repco Home Finance Ltd., held that foreclosure charges are not leviable to service tax as they are damages for breach of contract and not a service provided.

5. Service Tax on Annual Service Charges Against Working Capital Term Loan:
The Tribunal found that the 1% service charge on Working Capital Term Loans is a financial charge for providing financial services and is distinct from interest. Thus, service tax is leviable on this charge.

Penalty Waiver:
The Tribunal upheld the waiver of penalties under Sections 76, 77, and 78 of the Act, invoking Section 80, due to the appellant's bona fide belief and cooperation with the Department.

Conclusion:
The demand of Rs. 16,99,443/- with applicable interest was upheld, while the remaining demand was set aside. The Order-in-Appeal was modified accordingly.

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