AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (7) TMI 882
X X X X Extracts X X X X
X X X X Extracts X X X X
....d damages, penalty and forfeiture of security deposits would be leviable to service tax under section 65B(44) and section 66E of the Finance Act, 1994 [the Finance Act], has been assailed in this appeal. 2. The appellant, which is engaged in the manufacture of Blooms, Slabs, TMT Bars, Plates, Angles, Joists, Channels and Rails, entered into supply contracts and works contracts with suppliers/service providers for supply of goods as well as rendering of services to the appellant. The appellant claims that to ensure smooth operations of the business of the appellant and timely execution of the said contracts, clauses relating to liquidated damages, penalty, forfeiture of earnest money/ security deposits were included as part of the terms o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the issue involved in this appeal has been decided in the case of the appellant itself in Steel Authority of India Ltd. vs. Commissioner of GST & Central Excise, Salem [2021 (55) G.S.T.L. 34 (Tri.-Chennai)]. Learned counsel also placed reliance upon a Circular dated February 28, 2023 issued by Central Board of Indirect Tax and Customs on this issue. 8. Shri Rajesh Jain, learned authorized representative appearing for the department, however, supported the impugned order and contended that the appeal should be dismissed. 9. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 10. The aforesaid decision of the Tribunal in S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deration, agrees to an obligation to refrain from an act, would be a 'declared service' under section 66E(e) read with section 65B(44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). 27. It is trite that an agreement has to be read as a whole so as to gather the intention of the parties. The intention of the appellant and the parties was for supply of coal; for supply of goods; and for availing various types of services. The consideration contemplated under the agreements was for such supply of coal, materials or for availing various types of services. The intention of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 29. The situation would have been different if the party purchasing coal had an option to purchase coal from 'A' or from 'B' and if in such a situation 'A' and 'B' enter into an agreement that 'A' would not supply coal to the appellant provided 'B' paid some amount to it, then in such a case, it can be said that the activity may result in a deemed service contemplated under section 66E (e). 30. The activities, therefore, that are contemplated under section 66E(e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inst the CESTAT order ST/A/50879/2022-CU[DB] dated 20.09.2022 in this case and also against Order A/85713/2022 dated 12.8.2022 in case of M/s Western Coalfields Ltd. Further, Board has decided not to pursue the Civil Appeals filed before the Apex Court in M/s South Eastern Coalfields Ltd. supra (CA No. 2372/2021), M/s Paradip Port Trust (Dy. No. 24419/2022 dated 08-08-2022), and M/s Neyveli Lignite Corporation Ltd (CA No. 0051-0053/2022) on this ground. 6. In view of above, it is clarified that the activities contemplated under section 66E(e), i.e. when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and th....