𝗖𝗲𝘀𝘁𝗮𝘁 𝗖𝗵𝗲𝗻𝗻𝗮𝗶 𝗥𝘂𝗹𝗶𝗻𝗴 𝗼𝗻 𝗙𝗼𝗿𝗲𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗖𝗵𝗮𝗿𝗴𝗲𝘀 📢 𝗧𝗵𝗲 𝗧𝗿𝗶𝗯𝘂𝗻𝗮𝗹 𝗵𝗲𝗹𝗱: "Foreclosure charges collected by banks and NBFCs on premature loan terminations are damages and not subject to Service Tax. Appeal allowed."

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗔𝗽𝗽𝗲𝗹𝗹𝗮𝗻𝘁: M/s. Sundaram Finance Ltd. 𝗜𝘀𝘀𝘂𝗲: Foreclosure charges by banks/NBFCs for premature loan termination are deemed damages, not taxable under Service Tax. CESTAT Chennai ruled in favor of M/s. Sundaram Finance Ltd., setting aside demands.

⚖️ 𝗝𝘂𝗱𝗴𝗲𝗺𝗲𝗻𝘁: The Tribunal ruled foreclosure charges as damages for contract breaches, not taxable under Service Tax, citing the Repco India Ltd. case. The Finance Act's Section 65(12) amendment defining "lending" under "Banking and Other Financial Services" was deemed inapplicable. The demand and penalties were set aside, allowing the appeal.

📜 𝗖𝗮𝘀𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗧𝗶𝘁𝗹𝗲: M/s. Sundaram Finance Ltd. vs. The Commissioner of GST & Central Excise 𝗢𝗿𝗱𝗲𝗿 𝗗𝗮𝘁𝗲: 22 February 2023 📜 This ruling affirms that foreclosure charges are not subject to Service Tax as they constitute damages for contract breaches.