2023 (10) TMI 290

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....in the case of Brahmaputra Crackers and Polymer Ltd. V. Commr. of CGST & Excise, Dibrugarh-2022 (5) TMI 255-CESTAT Kolkata, wherein on identical issue, this Bench has held that Service Tax is not required to be paid on liquidated damages received from the clients. He also draws our attention to Circular No.178/10/2022-GST dated 03.08.2022 wherein in the context of GST, it is clarified that on the liquidated damages received from the clients, no GST is required to be paid. She submits that the ratio of this Circular is equally applicable for the Service Tax matters also. 3. The Learned AR reiterates the findings of the lower Authorities. 4. After going through the factual details, it is seen that demand is confirmed on the sole ground that....

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....mages had been received by the said appellant towards "consideration" for "tolerating an act" leviable to service tax under section 66E(e) of the Finance Act. In this connection it would be appropriate to reproduce the relevant portions of the decision of the Tribunal in South Eastern Coalfields : "25. It is in the light of what has been stated above that the provisions of section 66E(e) have to be analyzed. Section 65B(44) defines service to mean any activity carried out by a person for another for consideration and includes a declared service. One of the declared services contemplated under section 4 66E is a service contemplated under clause (e) which service is agreeing to the obligation to refrain from an act, or to tolerate an act ....

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....lauses are in the nature of providing a safeguard to the commercial interest of the appellant and it cannot, by any stretch of imagination, be said that recovering any sum by invoking the penalty clauses is the reason behind the execution of the contract for an agreed consideration. It is not the intention of the appellant to impose any penalty upon the other party nor is it the intention of the other party to get penalized. 28. It also needs to be noted that section 65B(44) defines "service" to mean any activity carried out by a person for another for consideration. Explanation (a) to section 67 provides that "consideration" includes any amount that is payable for the taxable services provided or to be provided. The recovery of liquidat....