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TMI Blog2023 (6) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... ,46,900/- and imposed equivalent penalty for the period from July 2012 to March 2013. The said demand has been raised under the category of 'Declared Service' under Section 66E(e) of the Finance Act 1994, on the amount received by the Appellant in excess of the purchase price paid for the immovable property, subsequent to cancellation of the agreement to Sale of the said property. 2. Briefly stated, the facts of the case are that the Appellant had entered into two agreements with M/s. Panyam Cements and Mineral Industries Ltd (seller) and M/s. Kare Electronics & Development Pvt Ltd who is the General Power of Attorney Holder(the confirming party) for purchase of 25 residential flats along with 25 car parking spaces and other amenities. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n act, done by the first party i.e. delaying in execution of the initial agreements by agreeing to cancel the initial agreements in lieu of compensation amount; and thus the receipt of said compensation will be covered as a declared service under Section 66E(e) of the Act. 3. Sri Sanjay Dixit and Sri Amit Jain, both CA and Sri Rajeev Agarwal, Advocate appeared for the appellant and Sri J. Chattopadhyay, Ld. A/R appeared for the Revenue. 4. The Counsel appearing for the appellant submits that the intention of the appellant was only to purchase the residential property for which it had entered into the two agreements to sell with the sellers. The subsequent cancellation of these original agreements was neither even thought of at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is a 'consideration' against 'declared service' as per Section 66E(e) of the Finance Act, introduced w.e.f. 1st July 2012. We find that the provisions contained in Section 66E(e) has been elaborately dealt by the co-ordinate Bench of the Tribunal in the case of M/s Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Limited (Supra), wherein the judgment in the case of South Eastern Coalfields Ltd. v Commissioner of Central Excise and Service Tax, Raipur, Service Tax Appeal No. 50567 of 2019 decided by Final Order No 51651/2020 dated 22.12.2020 was relied by the Tribunal. It has been observed therein that there is a distinction between a "consideration under a contract" and the "compensation for failure to fulfill the contract". It has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. However, they failed to perform their part of the obligation. The appellant came to know that an out of court settlement has been reached between the disputing sellers and developers whereby the Confirming Party in terms of the compromise may assign its rights to the Developer. The appellant agreed to cancel the two agreements for a lump-sum payment, a portion of which was compensation, which can at best be said to be for the damages/compensation of loss of interest on funds invested solely due to the non-fulfilment on the part of the seller and its associates. 8. The entire case of the Department for raising demand, as evident from Para 7.7 of the adjudication order, is that the appellant has received 'compensation' by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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