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Service Tax - Highlights / Catch Notes

Home Highlights November 2021 Year 2021 This

Levy of service tax - forfeiture of earnest money and retention ...


Forfeiture of Earnest Money Not Subject to Service Tax; Aimed at Preventing Defaults, Not Tolerating Them.

November 18, 2021

Case Laws     Service Tax     AT

Levy of service tax - forfeiture of earnest money and retention of compensation / liquidation damage for not delivery of purchased goods by the other party - declared service or not - The only purpose is for minium compensation and of forfeiting the earnest money is to ensure that the default act is not undertaken again or repeated. However, from any stretch of imagination the retention of such amount cannot be said to be an act of receiving consideration that too towards toleration of the defaulting act of the other parties. - No demand - AT

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