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TMI Blog2024 (6) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... ment entered in the year 1995 between the respondent and M/s. KSEB held that the fixed charges received by the respondent for the services rendered is a part of the sale of electricity and it cannot be said to fall under Declared Services as defined under Section 66E(e) of the Finance Act, 1994 - It is clear from the said provision that the power generated by the respondent, in case of need, could be supplied to other entities subject to the approval or with the consent of the company under Authority. He has observed that the document/agreement has to be read as a whole and not in piecemeal and referred to various judgments in support of his finding. There are no deficiency in the said reasoning of the learned Commissioner. Thus, the fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yamkulam. As per the conditions of the said Agreement, the respondent used to collect Monthly Capacity Charges or fixed charges and Energy Charges Liquid from M/s. KSEB. It is alleged that during the period 1.7.2012 to 31.3.2017, the respondent had collected annual fixed cost from M/s. KSEB as per the said Power Purchase Agreement, but failed to discharge Service Tax since the agreement entered between respondent and M/s. KSEB fall under clause (e) of Section 66E of the Finance Act, 1994 i.e., agreeing to the obligation to refrain from an Act, or to tolerate an act or a situation, or to do an act constitute a Declared Service . Consequently, demand notice was issued to the respondent on 23.3.2018 for recovery of the Service Tax amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration, for such an element of tolerance which is liable to Service Tax as the same would qualify as Declared Service in terms of Section 66E(e) of the Finance Act, 1994. 4. The learned Senior Advocate for the appellant has submitted that by a reasoned order, the adjudicating authority has set aside the demand issued to the respondent in as much as the respondent are manufactures of electricity and not rendering any service. He has submitted that since the respondent is only engaged in generation i.e., manufacturing and selling electricity and electricity being goods; and supply of the same to M/s. KSEB is as per their business requirement; therefore, the allegation of the department that the respondent s activity tantamount to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from an Act as envisaged under Section 66E(e) of the Finance Act, 1994. 7. We find that the learned Commissioner after analyzing the Power Purchase Agreement entered in the year 1995 between the respondent and M/s. KSEB held that the fixed charges received by the respondent for the services rendered is a part of the sale of electricity and it cannot be said to fall under Declared Services as defined under Section 66E(e) of the Finance Act, 1994. Further, referring to Section 43A of the Electricity Supply Act, 1948, the learned Commissioner rejecting the contention of the Revenue that the respondent is under an obligation to refrain from supplying power to other entities held that the said agreement is not tenable. It is clear from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or to tolerate an act or a situation, or to do an act under clause (e) of section 66E of the Finance Act, 1994 - Regarding. An issue has arisen on the levy of service tax on liquidated damages arising out of breach of contract, forfeiture of salary or payment of bond amount in the event of the employee leaving the employment before the minimum agreed period and similar other issues arising out of clause (e) of section 66E of the Finance Act, 1994. Reference has also been invited to Circular No. 178/10/2022-GST, dated 3rd August, 2022 [2022 (63) G.S.T.L. C29] regarding applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law, and its applicability to service tax relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the first party for doing or abstaining from such an act. Such contractual arrangement must be an independent arrangement in its own right. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration. 5. The issue also came up in the CESTAT in Appeal No. ST/50080 of 2019 in the case of M/s. Dy. GM (Finance) Bharat Heavy Electricals Ltd. in which the hon ble Tribunal relied on the judgment of divisional bench in case of M/s. South Eastern Coal Fields Ltd. v. CCE, Raipur {2021(55) G.S.T.L. 549(Tri. - Del.)}. Board has decided not to file appeal against the CESTAT order ST/A/50879/2022-CU[DB], dated 20-9-2022 in this case and also against Order A/85713 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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