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 Impugned order in appeal No 87781/13 that these charges are not for performance of service but are in nature of penalty, hence not part of value of taxable service. However has gone ahead to confirm the demand relying on CBEC circular of 11.06.2008.  In complaint filed by Neeraj Malhotra against levy of prepayment charges, Competition Commission of India has held as follows:

"20.7 It is, therefore, clear that in regard to this issue the provisions of the Contract Act are attracted which clearly provide that in case of breach of a contract, the party which wants to exit has to pay for consequential loss/damage to the other party. Indeed, if this were not the case, wherever in any competitive market the price of a product comes down all the long-term contract buyers would like to break the contract, and if the product prices went up all the suppliers/sellers would like to exit. This kind of situation could create huge uncertainties in any product market, with inevitable negative macro-economic impact."