No service tax liability on foreclosure charges collected by banks & NBFCs on premature termination of loans

Sundaram Finance Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai) No service tax liability on foreclosure charges collected by banks and NBFCs on premature termination of loans The CESTAT, Chennai in M/s Sundaram Finance Ltd. [Service Tax Appeal No. 646 and 647 of 2012 dated February 22, 2023] has set aside the orders passed by the Revenue Department levying service tax on Foreclosure Charges (“FC”) collected by the assessee. Held that, the FC collected by banks or Non-Banking Financial Company (“NBFC”) on premature termination of loans cannot be subject to service tax...