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TMI Blog2024 (9) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ce per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposing compensation or penalty is to ensure that the defaulting act is not undertaken or repeated and the same cannot be said to be towards toleration of the defaulting party. The expectation of the appellant is that the other party complies with the terms of the contract and a penalty is imposed only if there is non-compliance.' The Tribunal has consistently held that penalty/late delivery charges cannot be subjected to Service Tax Under Section 66E of the Finance Act 1994. Consequently, the impugned order dated 08.01.2019 is se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11/ST/2017 dated 28.11.2017, the demand of Rs. 15,11,667/- along with interest and penalty was confirmed. This order was upheld by the Commr (A) Vide the impugned order. Being aggrieved by the said Order, the present appeal is before this Tribunal. 3. Learned Counsel for the appellant submitted that the appellant has collected cheque dishonour charges from the buyers on account of their cheques being dishonoured and late delivery Charges from the suppliers who failed to provide the services within the agreed stipulated time. The said charges were collected as penalty which has been noted in the impugned order. He also contended that the amount recovered by the Appellant is not a consideration, as for an amount to qualify as consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled by holding that no Service Tax is leviable on such charges: Rohan Motors Ltd. V. Commissioner of Central Excise, Dehradun 2021 (45) G.S.T.L. 315 KJS Cement Ltd. V. Commissioner of CGST, Central Excise Customs Jabalpur (MP) 2023 (12) TMI 903-CESTAT New Delhi Clix Capital Services Pvt. Ltd. V. Commissioner of Service Tax, Chennai 2023 (5) TMI 302 CESTAT Chandigarh 3.3 Learned Counsel further submitted that the issue of non-taxability of the amounts collected on account of dishonour/bouncing of cheque and on account of delay in delivery of services is well settled and accepted by the Department. Hence, impugned demand is liable to be set aside. He stated that the disputed amounts recovered are penal charges with the intention to make good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on it. During the period 2013-14 they have also shown other income of Rs. 84,11,604/- which relates to late delivery charges. He stated that they have collected sums of money against late delivery charges on account of not completing the services provided with in the time specified by them and these collection of amount shown in miscellaneous income but did not pay service tax on it. He further stated that the amount collected by the appellant, the promisor , from their clients the promisee , tolerated the situation by not paying the due amount timely to appellant as a result the appellant has to tolerate an act or situation created by their clients due to cheque return/dishonor or late delivery charges on account of not completing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant plea is , therefore, not sustainable as their case is not covered under Rule 6(2) (vi) of Service Tax Rules 2006. 4. We have heard the Learned Counsel the Learned Authorized Representative. We note that this issue is no more res-integra. The Learned Counsel reliance on the Tribunal s decision in M/s South Eastern Coal Fields Ltd is justified. The Division bench had held as follows:- 25. It is in the light of what has been stated above that the provisions of Section 66E(e) have to be analyzed. Section 65B(44) defines service to mean any activity carried out by a person for another for consideration and includes a declared service. One of the declared services contemplated under Section 66E is a service contemplated under clause (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms of the agreement so that the penal clauses get attracted. The penal clauses are in the nature of providing a safeguard to the commercial interest of the appellant and it cannot, by any stretch of imagination, be said that recovering any sum by invoking the penalty clauses is the reason behind the execution of the contract for an agreed consideration. It is not the intention of the appellant to impose any penalty upon the other party nor is it the intention of the other party to get penalized. 28. It also needs to be noted that Section 65B(44) defines service to mean any activity carried out by a person for another for consideration. Explanation (a) to Section 67 provides that consideration includes any amount that is payable for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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