Service charges for pre-payment of loan amount not chargeable to service tax

Rajasthan Financial Corporation Vs Addl. Commissioner (CESTAT Delhi) CESTAT Delhi held that service charges for pre-payment or foreclosure of loan amount by the customer cannot be treated as taxable service and is not chargeable to service tax. Facts- The department issued a show cause notice dated 18.10.2010 for demanding aggregate service tax of Rs.48,51,115/- in respect of rent collected on immovable property let out for commercial use; selling loan application form; financial/ foreclosure charges on account of premature repayment of loans by the borrowers; financial charges on account of s...