2024 (6) TMI 763

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed certain amount as Liquidated Damages, Security Deposit (SD), Earnest Money Deposit (EMD), Retention Money withheld from the contractors on account of breach of terms and conditions of the contract in the event of unsatisfactory or late execution of service contract / supply contract causing deviation from the stipulated terms and conditions of the contract for agreement with the sales and service vendors. In the event of non-execution of the awarded contract, the said amount paid by the contractors were forfeited by the appellant. 3. An investigation was conducted against the appellant and thereafter, a Show Cause Notice dated 12.04.2019 was issued to the appellant for the period from October 2013 to June 2017, to demand Service Tax on ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ppellant had agreed to the obligation to refrain from an act or to tolerate the non- performance of the terms of the contract by the other party - Section 65B (44) defines 'service' to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manne....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. It would also be pertinent to refer to TRU Circular dated 20 June, 2012 issued by the Central Board of Excise and Customs as an Education Guide when the Negative List based taxation regime was introduced from July 2012 to clarify various aspects of the levy of service tax. The Board dealt with "consideration" in paragraph 2.2 of this Circular and pointed out that since the definition was inclusive, it will not be out of place to refer to the definition of "consideration" as given in section 2(d) of the Indian Contract Act, 1872. A service conceived in an agreement where one person, for a cons....