The Principal Commissioner Of Central ... vs M/S. Spandhana Sphoorty Financial Ltd
2024 Latest Caselaw 4436 Tel

Citation : 2024 Latest Caselaw 4436 Tel
Judgement Date : 13 November, 2024

Telangana High Court

The Principal Commissioner Of Central ... vs M/S. Spandhana Sphoorty Financial Ltd on 13 November, 2024

       THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
                                        AND
           THE HON'BLE SRI JUSTICE J.SREENIVAS RAO
                     Central Excise Appeal No.25 of 2024
JUDGMENT:

(Per the Hon'ble the Chief Justice Alok Aradhe)

Ms. Bokaro Sapna Reddy, learned Senior Standing

counsel for Central Board of Indirect Taxes and Customs

appears for the appellant (hereinafter referred to as 'the

Revenue'.

2. Heard on the question of admission.

3. This appeal under Section 35G of the Central Excise

Act, 1944 (for short 'the Act') has been filed by the

Revenue against order dated 07.02.2024, passed by the

Customs, Excise and Service Tax Appellate Tribunal

(hereinafter referred to as 'the Tribunal'), in Appeal

No.ST/3085/2021.

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4. Facts giving rise to filing of this appeal briefly stated

are that the respondent (hereinafter referred to as 'the

assessee') is engaged in micro finance business and

provides individual loans, small business loans etc. The

assessee is registered as non-banking financial institution

and is entitled to carry on the business without accepting

public deposits. The assessee, as part of its business,

precloses the loan accounts of the borrowers i.e., before

expiry of the loan term. The assessee received an amount

of Rs.35,64,15,174/- as interest on preclosure loans.

5. A show cause notice dated 11.10.2011 was issued to

the assessee invoking the period of limitation. The service

tax payable on the amounts collected for preclosure of the

loan accounts was Rs.3,81,69,738/- for the period

from 2006-07 to 2010-2011, which was worked out by the

Revenue.

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6. The Tribunal, in para 7 of the impugned order

dated 07.02.2024, has held as follows:

'Considering the rival contentions, we find that the issue herein is no longer res integra. The same has been considered by the Larger Bench of this Tribunal in the case of CST, Chennai vs Repco Home Finance Ltd. [2020 (42) GSTL 104 (Tri-LB)], wherein the issue before the Larger Bench was whether service tax is payable on the 'foreclosure charges' collected by the Appellant from their customers under the category 'banking and other financial services' Reference was answered by the Larger Bench in Para 54 as follows:

"Foreclosure charges collected by the banks and non-banking financial companies on premature termination of loans are not leviable to service tax under 'banking and other financial services' as defined under Sec. 65(12) of the Finance Act.".'

7. Learned Standing Counsel for the Revenue fairly

submitted that the decision in CST, Chennai (supra) has ::4::

attained finality as the same could not be challenged as the

same was below monetary limit. It is further submitted

that the issue involved in this appeal is pending

consideration before the Gujarat High Court.

8. In the decision rendered by the Larger Bench of the

Tribunal in CST Chennai (supra), it was held that the

assessee is not required to pay service tax on the

foreclosure charges. The appeal has been allowed by the

Tribunal in the light of the Larger Bench decision of the

Tribunal in CST Chennai (supra). The impugned order

dated 07.02.2024, passed by the Tribunal neither suffers

from any infirmity nor the findings recorded by the

Tribunal can be termed to be perverse. Therefore, no

substantial questions of law arise for consideration in this

appeal.

9. The Appeal fails and is hereby dismissed. No costs.