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of <h1>Tribunal rules in favor of appellants on service tax liabilities for foreclosure, penal charges, and insurance fees.</h1> <h3>Clix Capital Services Pvt. Ltd. (Earlier GE Money Financial Services Pvt. Ltd.) Versus Commissioner of Service Tax, Chennai</h3> Clix Capital Services Pvt. Ltd. (Earlier GE Money Financial Services Pvt. Ltd.) Versus Commissioner of Service Tax, Chennai - TMI Issues Involved:1. Service tax liability on foreclosure charges.2. Service tax liability on penal charges.3. Service tax liability on insurance administration fees.4. Invocation of extended period of limitation.Summary:1. Service Tax on Foreclosure Charges:The appellants challenged the demand for service tax on foreclosure charges under 'Banking and Other Financial Services' (BOFS). The Tribunal referred to the larger bench decision in *Repco Home Finance Ltd.*, which held that foreclosure charges are not subject to service tax as they are damages for breach of contract and not for any service rendered. The Tribunal followed this decision and set aside the demand on foreclosure charges.2. Service Tax on Penal Charges:The appellants argued that penal charges for late payment and cheque dishonor are independent of lending services and should not be taxed under BOFS. The Tribunal agreed, citing *Rohan Motors Ltd.* and other cases, which held that such charges are penal in nature and not consideration for any service. The demand for service tax on penal charges was set aside.3. Service Tax on Insurance Administration Fees:The appellants contended that insurance administration fees should not be classified under Business Auxiliary Services (BAS) as the services were not auxiliary to any business activity of the client. The Tribunal agreed, referencing *Sukhmani Society for Citizen Services* and other cases, which held that BAS applies only if the service is related to the business of the recipient. The demand for service tax on insurance administration fees was set aside.4. Invocation of Extended Period of Limitation:The appellants argued against the invocation of the extended period of limitation, stating that the issue involved interpretation of law. The Tribunal agreed, citing *Bharti Airtel Ltd.*, and noted that the department failed to establish fraud, collusion, or willful misstatement. Consequently, the invocation of the extended period was deemed unjustified, and the related demands were set aside.Conclusion:The Tribunal set aside the impugned orders, allowing the appeals with consequential relief as per law. The demands for service tax on foreclosure charges, penal charges, and insurance administration fees were all found unsustainable. The invocation of the extended period of limitation was also rejected.
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