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TMI Blog2024 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... Agency Service 4. Rent-a-Cab Scheme Operative Service 5. Renting of Immovable Property Service & 6. Works Contract Service. 2. During the Audit of records of the appellant for the period from April 2014 to March, 2016, the department observed that the appellant has forfeited the amount received in the name earnest money / security deposits of the contractors retaining the said amount as fines and penalties imposed on those various contractors, in the name of liquidated damages for delayed completion of works. The appellant was alleged to have failed to pay the following amount of service tax. (i) failed to pay Service Tax amounting to Rs.13458/- on the amount of Rs. 1,01,680/- retained through forfeiture of earnest money/security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed vide Order-in-Appeal No. 301 (CRM)ST/JDR/2019 dated 26.03.2019. Still being aggrieved, the present appeal has been filed by the appellant. 5. We have heard Mr. Shivam Bansal, ld. Counsel for the appellant and Mr. Aejaz Ahmed, ld. Authorised Representative for the department. 6. Ld. Counsel for the appellant has mentioned that the amount recovered by the appellant is not a consideration for providing any service as for an amount to qualify as consideration there has to be "quid pro quo". However, the appellant had not undertaken any activity against the recovery of such amount. Hence the retention of amount do not quality to be called as service under section 65 B (44) of the Act. The demand is therefore, not sustainable under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by time. The order is prayed to be set aside on merits as well as on the grounds of limitation and the appeal is prayed to be allowed. 8. Ld. DR on the other hand has submitted that as per Section 66E(e) of Finance Act, 1994 agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is a 'Declared Service'. In the instant case, the service provider have performed act viz. poor performance of work, not meeting the obligations in full, less than expected quality of work, delayed completion of work etc. and hereby resulted in non-compliance of mutually agreed terms in the contract. These acts have been tolerated by the appellant who has deducted certain amount from the Bill amount of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said amounts recovered as charges for breach or non-compliance of contractual terms and conditions cannot be construed as 'consideration' for 'refraining or tolerating an act' and were thus not leviable on Service Tax in terms of Section 66E(e) of the Finance Act, 1994. Reliance in this regard is placed on the following decisions : (i) M/s. K.N. Food Industries Pvt. Ltd. v. Commissioner of CGST & Central Excise, Kanpur [2019-VIL-731-CESTAT-ALH-ST] wherein it was held that if a contract provides for an eventuality which is uncertain and also remedy if 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that 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 under the Finance Act. (b) Union of India v. International Consultants and Technocrats [2018 (10) G.S.T.L. 401 (S.C.)] - since Service Tax is with reference to the value of service, as a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the Service Tax payable thereupon. (v) M/s. M.P. Poorva Kshetra Vidyut Vitran 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Tribunal in the case of M/s. South Eastern Coalfields (supra) was dealt with, has been referred in this Circular. The Board has decided to not to file any appeal against the decision in M/s. South Eastern Coalfields (supra). The said decision has also been upheld by Hon'ble Supreme Court vide its order dated 11.07.2023 passed in the case of Commissioner of Central Excise and Service Tax vs. South Eastern Coal Fields Limited in Civil Appeal No. 2372/2021. 12. In view of the entire above discussion, we hold that the amount retained has wrongly been held to be the amount towards rendering declared service. The order under challenge is therefore set aside and consequent thereto, the appeal is hereby allowed. [Pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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