https://www.taxtmi.com/caselaws?id=761627 Liquidated damages recovered for delay in performing supply and service contracts are not consideration for a declared service where the contractual clause operates as a penal or compensatory mechanism to secure performance. Service tax under Section 65B(44) read with Section 66E(e) applies only if there is an activity for consideration and a specific agreement to refrain from an act, tolerate an act or situation, or do an act for consideration. A mere recovery of damages for breach does not satisfy that test. The amount collected for delayed performance is therefore outside the service tax net. en-us Wed, 27 Mar 2024 00:00:00 +0530 Wed, 13 Nov 2024 17:16:52 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=761627 Liquidated damages recovered for delay in performing supply and service contracts are not consideration for a declared service where the contractual clause operates as a penal or compensatory mechanism to secure performance. Service tax under Section 65B(44) read with Section 66E(e) applies only if there is an activity for consideration and a specific agreement to refrain from an act, tolerate an act or situation, or do an act for consideration. A mere recovery of damages for breach does not satisfy that test. The amount collected for delayed performance is therefore outside the service tax net. Case-Laws Service Tax Wed, 27 Mar 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=761627