TaxTMI 
TaxTMI 
2024 (1) TMI 937
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....t, 1994 as amended read with Section 174 of the CGST Act, 2017 from M/s Bharat Heavy Electricals Ltd. Plot No 7, Tower A, Advan6t IT Park, Floor 5, Sector 142, Noida. (iii) I impose a penalty of Rs 3,14,05,595/- (Rs Three Crore Fourteen Lakh Five Thousand Five Hundred and Ninety Five only) upon M/s Bharat Heavy Electricals Ltd. Plot No 7, Tower A, Advan6t IT Park, Floor 5, Sector 142, Noida under Section 78 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 for contravention of the provisions as discussed supra. In terms of clause (ii) of 2nd proviso to Section 78 (1) supra, if the service tax and interest is paid within a period of thirty days of the date of receipt of this order, the penalty payable by them shall stand reduced to twenty five percent of the Service Tax so determined subject to the condition that the amount of such reduced penalty is also paid within thirty days of the date of receipt of this order." 2.1 We have heard Shri Z U Alvi, advocate for the appellant and Shri Sandeep Pandey, Authorized Representative for the revenue. 2.2 Arguing for the appellant learned counsel submits: • Appellant is a Public Sector ....
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....eements. It appears that with effect from 01.07.2012. amounts received for toleration of such acts attract service tax under Clause (e) of Section 66E of the Finance Act, 1994 read with Section 65B(44), 65B(51), 65B(37), 65B(22) and 66B ibid. M/s. BHEL have recovered liquidated damages penalty while making payment to suppliers/service contractors. 8.2. /s. BHEL had shown the amounts recovered as damages from their suppliers/contractors. In respect of all the supplies/contracts wherever there is a delay/slippage of delivery schedule, the damages amounts recovered are recognized and charged on such slippage for the period of delay between the due date of supply of goods / services as per the contractual terms and conditions against the actual date of supply of goods/services. M/s. BHEL has placed purchase orders conscientiously well in advance, and they also knew that if any delay occurs in supply of goods / services liquidated damages have to be paid. These damages are intended as a pre-agreed way to compensate purchaser, who has suffered loss as a result of actions (or in actions) by the supplier. in the instant case, such damages collected/charged from the suppliers/contr....
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....ver brought to the notice of the Department, They have not filed the ST 3 returns correctly by not showing the income from liquidated damages in returns. he statute reposes great faith on the assessee to assess the service tax liability and pay the same on their own. A specific question was posed as to whether service tax was paid on liquidated damages recovered, they have stated that the liquidated damages are one kind of loss to BHEL for non completion of the service / supply contracts and the same being in form of loss / damages, the same does not appears liable to pay service tax. We show the recovery of liquidated damages (LD) as our income under the head of "Recovery from sub contractors / vendors". Thus. it is quite evident that there is additional income generated in the course of provision of services, however the same is not taken into account while calculating their service tax liability under the mistaken belief that it is not taxable, Moreover the liquidated damages falls squarely within the ambit of Declared services. In the instant case, only on specific intelligence collected by the Departmental Officers the fact of non-payment of service tax, as mentioned ....
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....o 30.06.2017, should not be demanded from them under proviso to Section 73(1) of the Finance Act, 1994 read with Section 174 of CGST Act, 2017; (ii) interest should not be paid by them, at the applicable rates, on the amounts demanded at (i) above, in terms of Section 75 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017; and (iii) penalty should not be imposed on them under Section 76, Section 77 and Section 78 of the Finance Act, 1994 read with Section 174 of CGST Act 2017. 14. M/s. BHEL is also informed that in terms of clause (i) of proviso (2) to Section 78(1) of the Finance Act, 1994 read with Section 174 of CGST Act, 2017, if the amount of Service Tax demanded in the Show Cause Notice is paid along with applicable interest, as prescribed under Section 75 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017, within 30 (thirty) days from the date of communication of the notice, the amount of penalty liable to be paid shall be fifteen percent of the Service Tax demanded, provided that such reduced penalty is also paid within the above period of 30 days from the date of communication of the notice, in which case, all proceedin....
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....ted to service tax under section 66E (e) of the Finance Act has been decided by a Division Bench of the Tribunal in M/s South Eastern Coal Fields Ltd. Vs. Commissioner of Central Excise And Service Tax, Raipur [2020 (12) TMI 912-CESTAT-NEW DELHI] which was subsequently followed by the Tribunal in M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. Vs. Principal Commissioner, CGST And Central Excise, Bhopal [2021 (2) TMI 821-CESTAT NEW DELHI] . 7. Learned counsel for the respondent is justified in submitting that the issue stands covered by the Division Bench judgement of the Tribunal in M/s South Eastern Coal Fields Ltd. The Division Bench observed as follows: "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 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 or a situation, or to do an act. There has, therefore, to be a flow of consi....