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TMI Blog2024 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. It has also been settled that such liquidated damages/penal interest do not form part of the declared service as given under section 66(E) of the Act, as the activity contemplated under section 66E(e), i.e. when one party obligates to refrain from an act or to tolerate such an act or situation or to do an act or the activities when an agreement refers to such an agreement and there is flow of consideration for this activity, which in the present case, we do not find so. In the present case, there is no separate agreement between the respondent and the borrower for any such liability. Since the issue has been decided on merit in favor of the appellant, the other consequential issue of extended period of limitation, interest and penalty does not require any consideration. - HON BLE MS. BINU TAMTA, MEMBER (JUDICIAL) And HON BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Manoj Kumar, Authorized Representative of the Department Shri Atul Gupta, Chartered Accountant for the Respondent ORDER BINU TAMTA: 1. The Revenue is in appeal assailing the Order-in-Original No. 13/SS/PR.COMMR./CGST/DSC/2017-18 dated 16.01.2018 whereby the demand towards service tax was dropped. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Coalfields Ltd. Vs. Commissioner of CGST Central Excise, Mumbai 2022 (9) TMI 741-CESTAT Mumbai 4. Krishnapatnam Port Co. Ltd. Vs. Commr. Of C.Ex. S.T., Guntur 2023(72)G.S.T.L. 259 (Tri-Hyd) 5. M/s Bajaj Finance Ltd. Vs. Commissioner of Central Excise GST, Pune-I 2022 (8) TMI 473-CESTAT Mumbai 6. Religare Securities Ltd. Vs. Commissioner of Service Tax, Delhi 2014 (36) S.T.R. 937 (Tri.-Del.) 7. Commissioner of Service Tax, Chennai Vs. Repco Home Finance Ltd. 2020 (42)G.S.T.L. 104 (Tri.-LB) 8. Commissioner, Central Excise Service Tax, Large Taxpayer Unit Delhi vs. M/s Power Finance Corporation 2022 (9)TMI 1062-CESTAT New Delhi 9. Shubham Electricals Vs. Commissioner of C.Ex. S.T., Rohtak 2015 (40) S.T.R. 1034 (Tri.-Del.) 10. M/s Frisco Foods Private Limited Vs. Commissioner, Customs, Central Excise and Service Tax, Dehradun 2021 (11) TMI 428-CESTAT New Delhi 4. The Larger Bench of the Tribunal in LSE Securities Ltd 2013 (29) STR 591 (Tri.) had laid down the parameters to ascertain whether any amount/payment received is chargeable to service tax after considering various decisions, the Circulars issued by the Board from time to time and also relying on the Budget s Speech of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terated in the case of Union of India vs. Intercontinental Consultants and Technocrats 2018(10) GSTL (401) S.C. The following observations of the Tribunal in South Eastern Coalfileds are quoted below: 24. What follows from the aforesaid decisions of the Supreme Court in Bhayana Builders and Intercontinental Consultants, and the decision of the Larger Bench of the Tribunal in Bhayana Builders is that consideration must flow from the service recipient to the service provider and should accrue to the benefit of the service provider and that the amount charged has necessarily to be a consideration for the taxable service provided under the Finance Act. 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. It should also be remembered that there is marked distinction between conditions to a contract and considerations for the contract . A service recipient may be required to fulfil certain conditions contained in the contract but that would not necessarily mean that this value would form part of the value of taxable services that are provided. 25. It is in the light of what h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxable services provided or to be provided. The recovery of liquidated damages/penalty from other party cannot be said to be towards any service 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. 7. The aforesaid decision of the Tribunal in South Eastern Coalfields Ltd. have been subsequently followed in the case of M/s Bajaj Finance Ltd (supra), Western Coalfields Ltd. (supra), Northern Coalfields Ltd (supra) and Krishnapatnam Port Co. Ltd (supra). 8. Both sides have placed on record the Circular No. 214/01/2023-S.T. dated 28.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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