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TMI Blog2024 (1) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers of coal on the short lifted/un-lifted quantity of coal, collected amount towards compensation/penalty from the contractors engaged for breach of terms and conditions and collected amount in the name of damages from the suppliers of material for breach of the terms and conditions of the contract can be treated as declared service under section 66E(e) of the Act. Relying on the decision of the Larger Bench in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI-LB] , which was affirmed by the Apex Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] dismissing the department s appeal, the principle enunciated was any amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dayal Singh, Advocates. For the Revenue : Shri Manoj Kumar, Authorised Representative . ORDER BINU TAMTA : 1. Challenging the Order-in-Original RPR/EXCUS/000/COM/CEX/63/2019 dated 27.02.2020, the instant appeal has been filed on the issue that the compensation received by the appellant on the failure to procure the power at contractual quantity is not a declared service covered under Section 66E(e) of the Finance Act, 1994 (hereinafter referred to as the Act). 2. Briefly stated the facts are that the appellant is engaged in manufacturing, Aluminium and Generating Power in the captive power plant for own usage and also for sale in the market for which they entered into Power Sale/Purchase Agreement (PSA/PPA) with M/s M. P. Power Management C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant has submitted that the issue raised in this appeal has already been decided by this Tribunal in M/s South Eastern Coalfields Ltd. vs Commissioner of Central Excise Service Tax, Raipur 2020 (55) GSTL 549 (Tri. Del.). The learned Counsel also relied on the latest Circular No.214/1/2023- ST dated 28.02.2023, where CBIC clarified that activities contemplated under Section 66E(e) i.e., when one party agrees to refrain from an act, or to tolerate an act, or a situation, or to do an act, are the activities, where the agreement specifically refers to such an agreement and there is a flow of consideration for this activity. He, accordingly prayed that the impugned order needs to be set aside. The learned Authorised Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated under the agreements was for such supply of coal, materials or for availing various types of services. The intention of the parties certainly was not for flouting the 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 servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a flow of consideration for this activity. 6. Applying the factors culled out in the aforesaid decisions, we find that the appellant in terms of clause 3.3.4 only casts a burden on the procurer to ensure minimum scheduling of electricity and in the event he procured less than the minimum quantum compensation has to be worked out. This is only a condition of the contract and cannot be termed as consideration for the contract . The underline object of the contract is to provide the services of electricity on requisite consideration and the compensation under clause 3.3.4 is distinct as the purpose thereof is to ensure that the minimum quantity of power is procured and there is no default. Therefore, the amount received as compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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