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TMI Blog2024 (8) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ement where one person, for a consideration, agrees to an obligation to refrain from or tolerate or do an act, would be a declared service under Section 66E(e) ibid. Any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable. In other words, the amount charged has to be necessarily a consideration for the taxable service provided under the Finance Act. Resultantly, it becomes clear that, the compensation received for making good the financial damages/injury cannot be said to be consideration at all and has no nexus with any taxable service. It is observed that the appellant had agreed to sell TMT Bars to M/s. Shri Kapileswar Steel Raip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that appellant had received a monetary consideration due to cancellation of deal entered for purchase of goods from M/s. Shri Kapileswar Steel, Raipur. Department formed the opinion that the said amount is an amount towards consideration for rendering Declared Services as defined under section 66E of the Finance Act. With this observation vide Show Cause Notice No.78/2016-17 dated 12th August, 2016 Service Tax amounting to Rs.3,63,384/- is proposed to be recovered from the appellant alongwith the appropriate interest. Penalties under section 76 77 of the Finance Act are also proposed to be imposed. Proposal was initially confirmed vide Order-in-Original No.01/2016-17 dated 23rd January, 2017. The appeal against the said order has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.02.2023 5. Finally, submitting that the demand is otherwise barred by time, the order under challenge is prayed to be set aside and the appeal is prayed to be allowed. 6. Ld. Departmental Representative though has reiterated the findings arrived at in the order under challenge. However has acknowledged that the issue involved vis- -vis leviability of service tax on the forfeited amount is no more res-integra. 7. Keeping in view the submissions of both the parties herein, perusing the decisions relied upon and also section 66E (e) of Finance Act, we foremost have observed that under the said section 66E(c) the declared service is defined to mean agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38) G.S.T.L. 60 (Tri. - All.). 10. Reverting to the facts of the present case, it is observed that the appellant had agreed to sell TMT Bars to M/s. Shri Kapileswar Steel Raipur pursuant to the order for supply placed by the later. However, Shri Kapileswar cancelled the said purchase order. This cancellation has been treated as a breach of contract. Appellant vide two letters dated 28.02.2013 and 31.03.2013 has conveyed that the amount of Rs.18,90,000/- and Rs.10,50,000 respectively has been forfeited by the appellant subsequent to buyer failing to perform his part of contract with the appellant. The act of forfeiting the amount in the given circumstances doesn t confirm to the meaning of Declared Service as discussed above. 11. We also obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that eventuality occurs, such charges made towards making good the damages, losses or injuries arising from unintended events cannot be considered to be the payments for any services under Section 66E(e) of Finance Act, 1994. (ii) M/s. Monnet Ispat Energy Ltd. v. CCE ST, Raipur [2018 (9) TMI 1514] - while deciding whether Service Tax liability arises on the UI Charges received by the Company in terms of Section 66E(e) of the Finance Act, 1994, the Court held that UI Charges have been received by the Appellant only in those cases where the buyer has drawn more electricity than what was scheduled for him and does not amount to consideration for declared service. (iii) M/s. Lemon Tree Hotels v. Commissioner, GST, Central Excise Customs - 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itran Co. Ltd. v. Principal Commissioner CGST and CE, Bhopal [2021 (2) TMI 821]/2021 (46) G.S.T.L. 409 (Tri. - Del.), wherein the ratio of the decision in the case of M/s. South Eastern Coalfields (supra) was followed and the order confirming the demand of Service Tax on the amount collected towards liquidated damages and theft of electricity was set aside. 12. From the perusal of these decisions it becomes abundantly clear that the issue of considering a forfeited amount as an amount of consideration towards declared services stands already settled in favour of the assessee. The same is already held to not to be the consideration towards any service. In fact the cancellation of contract itself is already held to not to be a service. With t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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