2025 (6) TMI 1815

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....ted facts are that the Appellant is a Non-banking Financial Company engaged in the business activity of financing the purchase of vehicles like cars, commercial vehicles, immovable properties like houses, apart from providing the other services of Software Solutions, Business Process Outsourcing, Hire-purchase and Leasing, including equipment leasing etc. While rendering the money-lending service where a customer avails loan/hire-purchase facility, such customer could pay-up part or entire outstanding principal, which would amount to 'pre-closure/foreclosure' of the loan. For this, such customer would end up paying additional charges and this condition is clearly part of the Agreement between the Appellant and its customer. The Revenue trea....

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....e have very carefully considered the documents placed on record, apart from various judicial decisions relied upon during the course of arguments. Upon hearing both sides, the only issue to be decided by us is, "whether the denial of refund is in accordance with law?" 4. Facts are not disputed; there is also no dispute as to the granting of refund as a consequence of the order of the Tribunal supra. Admittedly, in the above order, after following decision of a Larger Bench, it has been held that foreclosure charges collected by a Non-banking Financial CoAmpany is not liable to Service Tax under "Banking and Financial Services". This very foreclosure charge was treated as payment towards liquidated damages in the present dispute the refun....

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..... Further, the Delhi Bench of the Tribunal considered the levy of Service Tax for liquidated damages within the meaning of Section 66E(e) of the Finance Act, 1994 in the case of South Eastern Coalfields Limited Vs CCE & ST Raipur - 2021 (55) G.S.T.L. 549 (Tri.-Del.) and relevant observations of the Bench are as under : - " 28. It also needs to be noted that Section 65B(44) defines "service" to mean any activity carried out by a person for another for consideration. Explanation (a) to Section 67 provides that "consideration" includes any amount that is payable for the taxable services provided or to be provided. The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither....