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TMI Blog2025 (3) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal after considering the provision of Section 65B(44) defining 'service', Section 66E(e) enumerating the 'declared services' and the provisions of Section 67 dealing with the valuation of taxable service for charging service tax and referring to the decision of the Hon'ble Apex Court in the case of Commissioner of Service Tax Vs. M/s. Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT] and Union of India Vs. Intercontinental Consultants and Technocrats [2018 (3) TMI 357 - SUPREME COURT] and the TRU Circular dated 20.06.2012, held as 't is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts collected as penalties and liquidated damages do not constitute consideration for any service under the Finance Act, 1994.
The impugned order deserves to be set aside. The appeal is, accordingly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidated damages, forfeiture of security deposits, fines/penalties/Earnest Money deposit, etc." as compensation for the losses incurred on account of delay on part of the contractors/vendors in completion of the work project etc., amounts to toleration of an act, hence is a 'Declared Service' and taxable in terms of Section 66E(e) of the Act on account of breach of the terms of the contract, is no longer res integra as submitted by the learned counsel for the appellant and fairly agreed to by the learned Authorized Representative. Learned counsel for the appellant has referred to series of decisions in support of her submissions that the penal charges are charged with the intention to make good for the losses and so as to act as a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er No.50329/2023 dated 16.02.2023-CESTAT New Delhi] (xi) M/s.Bharat Heavy Electricals Ltd. Vs. Commissioner of Customs, Excise & ST, Faridabad-I, [Final Order No.60227/2024 dated 7.5.2024-CESTAT-Chandigarh.] (xii) South Eastern Coalfields Ltd. Vs. Commissioner of Central Excise and Service Tax [2020(12) TMI 912 -CESTAT-New Delhi.] (xiii) Commissioner of Central Excise and Service Tax Vs. South Eastern Coalfields Ltd. [2023 (8) TMI 606 - SC Order.] (xiv) MP Poorva Kshetra Vidyut Vitran Co. Ltd. Vs. Principal Commissioner, CGST & CE, Bhopal [2021(46) GSTL 409 (T-Delhi)] (xv) Rajcomp Info Service Ltd. Vs. Commissioner of Central Excise, Jaipur [2022 (65) GSTL 103 (Tri.-Del.)] (xvi) Dy. GM (Finance), BHEL Vs. Commissioner of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 43. It is, therefore, not possible to sustain the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case do not suggest that there is any other independent agreement to refrain or tolerate, or to do an act between the parties hence the issue is decided in favour of the appellant. The other issues related to invocation of extended period of limitation, penalty and interest are not required to be gone into as the issue on merits stands decided in favour of the appellant. 8. The learned Counsel for the appellant has also submitted that in certain transactions, the amounts received in the nature of liquidated damages/forfeited amounts from the contractors located outside India, i.e., in Canada, Hong Kong, Singapore, etc there cannot be any service tax liability on the alleged service of tolerating the act of delay in the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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