https://www.taxtmi.com/caselaws?id=775073 CESTAT NEW DELHI held that amounts collected as fines, penalties, liquidated damages, and forfeiture of earnest money from contractors for poor performance or failure to meet contractual obligations are not subject to service tax under Section 66E(e) of the Finance Act, 1994. The tribunal ruled that such amounts lack nexus with any taxable service and cannot be considered "consideration" under Section 65B(44). These penal charges are recovered to compensate losses and deter contractual violations, not as payment for services rendered. For declared services under Section 66E, there must be an independent agreement between parties. Following Circular No.214/1/2023-ST and established court precedents, the tribunal determined no service was actually provided against these amounts, hence no service tax demand was maintainable. The lower authority's order was set aside and the appeal was allowed. en-us Thu, 17 Jul 2025 00:00:00 +0530 Sat, 19 Jul 2025 08:25:39 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=775073 CESTAT NEW DELHI held that amounts collected as fines, penalties, liquidated damages, and forfeiture of earnest money from contractors for poor performance or failure to meet contractual obligations are not subject to service tax under Section 66E(e) of the Finance Act, 1994. The tribunal ruled that such amounts lack nexus with any taxable service and cannot be considered "consideration" under Section 65B(44). These penal charges are recovered to compensate losses and deter contractual violations, not as payment for services rendered. For declared services under Section 66E, there must be an independent agreement between parties. Following Circular No.214/1/2023-ST and established court precedents, the tribunal determined no service was actually provided against these amounts, hence no service tax demand was maintainable. The lower authority's order was set aside and the appeal was allowed. Case-Laws Service Tax Thu, 17 Jul 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=775073