S.T. on pealty

[mehta pradip]

We are supplying ele. goods to power utility.For delay in delivery ,we have to pay penalty.So we are reducing ex.works price by penalty as per Victory Ele. Ltd. case (2013 (12) TMI-81 - CESTAT, Chennai) & then pay E.D. on it .

1)are we correct ?

2)have the purchaser to pay service tax or not under entry. no .57 for tolerating an act of delay in delivery in this situation?

3) If we do not reduce ex-works price by penalty amount, then also purchaser will deduct penalty. Have purchaser to pay service tax or not under entry. no .57 for tolerating an act of delay in delivery in this situation?

AI Summary

Tolerating an Act service: purchaser liable for service tax when penalty reduces price or is paid
The department accepts reducing the ex-works price for central excise purposes. For service tax, the purchaser is liable under the declared service of tolerating an act whether the supplier reduces the ex-works price by penalty or the purchaser deducts the penalty later, because the three conditions - service provider, service receiver and consideration - are present; absence of any one element would negate service tax liability.