Service tax not leviable on penal interest and bounce charges

Last updated: 16 August 2023

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Quick Summary

The CESTAT, Mumbai has ruled that service tax is not applicable to penal interest and bounce charges collected by financial institutions. The tribunal found that these charges are not received as consideration for tolerating an act, but rather as penalties for delayed payments or dishonoured cheques. Therefore, they are not subject to service tax.

Court :
CESTAT, Mumbai

Brief :
The CESTAT, Mumbai, in M/s Bajaj Finance Ltd. v Commissioner of Central Excise and GST [Service Tax Appeal No. 90043 of 2018 dated August 07, 2023] set aside the impugned order and held that the assessee is not receiving penal interest and bouncing charges as a consideration for tolerating an act. Thus, service tax cannot be demanded.

Citation :
Service Tax Appeal No. 90043 of 2018 dated August 07, 2023

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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