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2019 (12) TMI 1372 - AT - Service TaxBanking and Other Financial Services - late payment charges - delayed deposit of instalment of higher-purchase charges by the customers - C.B.E. C. Circular dated 3-8-2011 - HELD THAT - The amount received by the appellant on account of delayed payment charges by the customers is not to be treated as consideration for provision of service and therefore, does not form part of the value of taxable service as clarified by C.B.E. C. Circular dated 3-8-2011 - As the C.B.E. C. has clarified that the delayed payment charges are not includible in the taxable value of service, therefore, the appellant is not liable to pay service tax on these incidental charges received on account of delayed payment of instalment by the customers. Appeal allowed - decided in favor of appellant.
Issues:
Appeal against service tax on late payment charges under 'Banking and Other Financial Services'; Application for additional grounds. Analysis: The appellant, engaged in Hire-Purchase Finance Services, faced a demand for service tax on late payment charges not included in taxable services. The appellant argued citing circulars that such charges are not part of taxable value. The authorities confirmed the demand. Despite the appellant's absence, the issue was considered due to its legal nature. The appellant relied on circulars to support their case, while the Authorized Representative supported the impugned order. The Tribunal examined the circulars cited by the appellant, which clarified that delayed payment charges are not part of taxable value as they are penal charges for late payments, not for services provided. Relying on these circulars, the Tribunal held that the appellant is not liable to pay service tax on incidental charges for delayed payment by customers. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. In conclusion, the Tribunal's decision was based on the interpretation of circulars stating that delayed payment charges do not form part of taxable value. This ruling favored the appellant, leading to the setting aside of the demand for service tax on such incidental charges.
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