TaxTMI 
TaxTMI 
2024 (9) TMI 619
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.... to M/s Parle and collected ex-gratia job charges amount from Principal manufacturer M/s Parle. The case of the department is that the said ex-gratia amount is leviable to service tax in terms of Section 66E(e) of the Finance Act, 1994. 2. Ms. Rinki Arora, Learned Counsel appearing on behalf of the Appellant at the outset submits that the issue is no longer res-integra as in the cases of identically placed contract manufacturer of biscuit for Parle this issue has been decided in favour of the assessee. She placed reliance on the following judgments:- M/s K. N. Food Industries Pvt. Ltd. Versus CCE 2020 (38) G.S.T.L. 60 (Tri. - All.) CCE Vs HFCL - 2015 (321) ELT 300 (Tri.) CCE Vs Victory Electricals Ltd. - 2013 (298) ELT 534 (Tri-LB). United Telecom Ltd. Vs CCE - 2006 (204) ELT 626 (Tri.) Pragati Concrete Products - 2015 (322) ELT 819 (SC) Rajkumar Forge Ltd - 2010 (262) ELT 155 (Bom.). Padmini Products -1989 (43) ELT 195 (SC). Telco - 2006 (196) ELT 308 (T) Wiptech Peripherals - 2008 (232) ELT 621. Thyrocare Services - 2006 (4) STR-200 (T). Union of India v. Kamlakshi Finance Corporation Ltd [1991 (55) E.L.T. 433 (S.C.) TATA Motors Ltd. v. Union of India 200....
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....s, the demand of Service Tax to the tune of Rs. 45,03,712/- was confirmed along with confirmation of interest and imposition of penalty of identical amount under Section 78 of the Finance Act, 1994 as also imposition of penalties under Section 77(2) of Finance Act, 1994. The order of Original Adjudicating Authority was upheld and hence the present appeal. 4. After hearing both the sides duly represented by Shri H.P. Kanade, Learned Advocate appearing for the appellant and Shri Shiv Pratap Singh, Learned AR appearing for the Revenue, we find that the short issue required to be decided in the present appeal is as to whether the receipt of ex-gratia job charges amount by the appellant amounts to providing any services so as to attract the Service Tax on the same. We find that appellant is admittedly manufacturing confectionaries for and on behalf of the M/s. Parle and is clearing the same upon payment of Central Excise duty on the basis of MRP declared by M/s. Parle. It is only in situation when the appellant's capacity, as a manufacturer, is not being fully utilized by M/s. Parle, their claim of ex-gratia charges arises so as to compensate them from the financial damage/injury. As ....
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....ntended" events and does not emanate from any obligation on the part of any of the parties to tolerate an act or a situation and cannot be considered to be the payments for any services. 5. In view of the foregoing, we find no reasons to uphold the impugned orders. Inasmuch as the appeal stands allowed on merits, the plea of limitation is not being adverted to." b) Similar view was taken by division bench at CESTAT Allahabad in the case of M/s Prahladrai Confectioneries Pvt. Ltd (supra) wherein this Tribunal passed the following order:- 5. The Appellant's submissions are as under : - (i) that, the EX-GRATIA amount received is given only in cases of low utilization/non utilization of the production capacity and is not given for refraining the Appellants or tolerating any act, hence, there is no application of Section 66E, Finance Act, 1994; (ii) that, except for the activity of manufacturing carried out for and on behalf of PBPL, there is no other activity/service provided by the Appellants to PBPL; (iii) that, amount received as EX-GRATIA is component of job work charges only and hence it is not a consideration for any service at all; (iv) that it only spare manufact....
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....er Authorities have invoked the provision of the Section 66E (e) of the Act which relates to the definition of the declared services. The same is to the effect that "(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act". Provisions of Section 65B (44) of the Act refers to the process amounting to manufacture or production of goods on which the duty is leviable under Section 3 of the Central Excise Act, 1944 as on service. However no Service Tax is leviable on such services, as the same is covered under the negative list. Further, agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is a declared service on which the Service Tax is leviable under Section 66B of the Act. In the present case apart from manufacturing and receiving the cost of the same, the appellants were also receiving the compensation charges under the head ex- gratia job charges. The same are not covered by any of the Acts as described under Section 66E (e) of the Finance Act, 1994. The said Sub-clause proceeds to state various active and passive actions or reactions which are declared to be a service namely....