2023 (5) TMI 11

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....he averments made in the said application, we are of the view that the prayer made in support of out of turn hearing of the appeal can be considered, in the interest of justice. Accordingly, miscellaneous application filed by the applicant is allowed. Since, the issue involved in this appeal lies in a narrow compass, with the consent of both sides, the appeal is taken up for hearing and disposal today. 3. Taxability of Liquidated damages/ penalties recovered by the appellant from its suppliers and contractors for delayed completion of the assigned work is the subject matter of the present dispute. On scrutiny of the entries made in the Trial Balance under the accounting head no. 5380/81, with the narration "Recovery from suppliers/contract....

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....tipulates that if the contractor / job worker fails to maintain the required progress of work, which results in delay in the completion of the project work, the appellant shall impose the above charges or penalties on them. On perusal of the case records, we find that for provision of the taxable services, the appellant had paid the service charges along with service tax amount as per the claims made in the invoices. The liquidated damages / penalties recovered by the appellant for delay in completion of the work or supply of goods cannot be considered as 'Service', for the purpose of levy of service tax. Further, the amount received by the appellant cannot also be termed as 'Consideration' for provision of the taxable service. Thus, in our....

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.... obligation to tolerate an act or a situation; and agreeing to the obligation to do an act. It has further been clarified that in order to be covered under such phrase, there must be independent contractual arrangements and must have necessary and sufficient nexus between the supply (agreement to do or to abstain from doing something) and the consideration. In the present case, it is not a matter of routine that the appellant had invariably collected the amount towards liquidated damages / penalties from each and every contract entered into between it and the service provider. Since, collection of such amount is towards delayed completion of work, which is not a regular phenomenon and arises out of non-performance of the contract in the man....