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2022 (9) TMI 741 - AT - Service TaxTaxability - contractual obligations enforced by the appellant, to the monetary detriment of their buyers, contractors and material suppliers - declared service or not - HELD THAT - The facts in the present dispute are identical to that in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR 2020 (12) TMI 912 - CESTAT NEW DELHI where it was held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act. An acceptable, and judicially distinguishable, alternative has not been brought before us by Revenue.
Issues:
1. Tax liability determination under section 73 of Finance Act, 1994 2. Interpretation of section 66E (e) of Finance Act, 1994 3. Applicability of previous tribunal decisions 4. Impact of admission of appeal on binding precedent status 5. Concept of 'declared service' and its implications Issue 1: Tax liability determination under section 73 of Finance Act, 1994: The judgment revolves around the tax liability imposed on the appellant, M/s Western Coalfields Ltd, under section 73 of the Finance Act, 1994. The Commissioner of CGST & Central Tax, Nagpur -II determined a tax liability of Rs. 12,64,55,319 on the total recovery of Rs.93,93,07,361 made by the appellant between July 2012 and March 2016. This determination included interest under section 75 of the Finance Act, 1994, and penalties under sections 77 and 78 of the same Act. Issue 2: Interpretation of section 66E (e) of Finance Act, 1994: The core dispute in the case was the interpretation of section 66E (e) of the Finance Act, 1994, which involves 'agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act.' The tax liability was based on various contractual obligations enforced by the appellant, such as forfeiting earnest money deposits, penalties for breaches, demurrage, and liquidated damages. The appellant contested this interpretation, citing a decision of the Tribunal in a similar case involving South Eastern Coalfields. Issue 3: Applicability of previous tribunal decisions: The appellant argued that the issues in dispute were similar to those addressed in a previous decision involving South Eastern Coalfields. The Tribunal found the facts in the present case to be identical to the previous case and concluded that no alternative argument was presented by the Revenue that could distinguish the current case. As a result, the Tribunal set aside the impugned order and allowed the appeal based on the precedent set by the earlier decision. Issue 4: Impact of admission of appeal on binding precedent status: The judgment also discussed the impact of the admission of an appeal on the binding precedent status of a decision. The Revenue had argued that the appeal against a decision should deprive it of the status as a binding precedent. However, the Tribunal disagreed with this argument, emphasizing the importance of judicial consistency and the preservation of tax certainty through adherence to previous decisions. Issue 5: Concept of 'declared service' and its implications: The judgment delved into the concept of 'declared service' and its implications on tax liability. The Revenue contended that the 'declared service' concept obviates the need to evaluate the essence of the service activity for taxation purposes. However, the Tribunal found that this argument did not align with the decision in the South Eastern Coalfields case and ruled in favor of the appellant based on the existing legal framework. In conclusion, the judgment analyzed various legal issues, including tax liability determination, statutory interpretation, precedent applicability, and the concept of 'declared service,' ultimately ruling in favor of the appellant based on established legal principles and previous tribunal decisions.
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