https://www.taxtmi.com/caselaws?id=421995 Liquidated damages or delay charges recovered for breach of contractual delivery obligations are not consideration for a declared service under section 66E(e) unless the agreement specifically provides for tolerating the default for separate consideration. The service tax charge depends on an express arrangement to refrain from an act, tolerate an act or situation, or do an act, with consideration flowing for that activity. Amounts characterised as penalty or compensatory damages are intended to secure contractual compliance, not to tax mere breach. On that basis, delay charges for non-compliance with delivery timelines are outside the scope of declared service and the related service tax, interest, and penalty demand cannot be sustained. en-us Wed, 04 May 2022 00:00:00 +0530 Fri, 06 May 2022 08:31:16 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=421995 Liquidated damages or delay charges recovered for breach of contractual delivery obligations are not consideration for a declared service under section 66E(e) unless the agreement specifically provides for tolerating the default for separate consideration. The service tax charge depends on an express arrangement to refrain from an act, tolerate an act or situation, or do an act, with consideration flowing for that activity. Amounts characterised as penalty or compensatory damages are intended to secure contractual compliance, not to tax mere breach. On that basis, delay charges for non-compliance with delivery timelines are outside the scope of declared service and the related service tax, interest, and penalty demand cannot be sustained. Case-Laws Service Tax Wed, 04 May 2022 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=421995