Liquidated damages not liable to service tax where prior Tribunal rulings and Board acceptance have settled the issue.

Liquidated damages received under the contractual arrangement were held not to attract service tax, as the issue had already been settled by prior Tribunal decisions and accepted administratively by the Board. The levy was therefore treated as no longer sustainable, and the service tax demand on such receipts was set aside in favour of the assessee.

---

---

Issues: Whether service tax was demandable on liquidated damages received by the appellant.

Analysis: The issue had already been settled by prior Tribunal decisions holding that liquidated damages do not attract service tax. The decision also noted the Board's circular accepting the Tribunal view and declining to pursue further appeals, reinforcing that the levy on such receipts was no longer sustainable.

Conclusion: The demand of service tax on liquidated damages was unsustainable and was set aside in favour of the assessee.

Ratio Decidendi: Liquidated damages received under the relevant contractual arrangement do not give rise to service tax liability when the issue has been consistently settled in favour of the taxpayer and accepted administratively by the Board.

---