Case Law Details
Commissioner, Central Excise & Service Tax Vs Power Finance Corporation (CESTAT Delhi)
CESTAT Delhi held that premium charged due to interest restructuring is net present value of loss of interest and therefore not leviable to service tax under ‘banking and other financial services’.
Facts-
It was noticed that the respondent-assessee was providing loans for energy and energy efficiency projects, State Electricity Boards and private parties and even though the respondent had earned Rs. 08,94,64,916/- as premium of interest for restructuring of loans in 2008-2009 and Rs. 06,76,027/- during 20072008 but the respondent treated these amount as interest income and did not pay service tax on it though such charges were leviable to service tax as they were received while providing ‘banking and other financial services‟. Accordingly, a show cause notice dated 31.01.2011 was issued to the respondent proposing a demand of service tax of Rs. 01,11,57,422/- along with interest and applicable penalties. The Commissioner, by order dated 13.12.2011, dropped the whole demand initiated against the respondent. The Department has filed this appeal against the aforesaid order dated 13.12.2011.
Conclusion-
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