TaxTMI 
TaxTMI 
2025 (3) TMI 969
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.....2018 on the amounts received in the nature of "Liquidated damages, forfeiture of security deposits, fines/penalties/Earnest Money deposit, etc." as compensation for the losses incurred on account of delay on part of the contractors/vendors in completion of the work project etc., amounts to toleration of an act, hence is a Declared Service, and taxable in terms of Section 66E(e) of the Finance Act, 1994 [The Act]. 2. The appellant is engaged in exploration of oil and natural gases and was registered with the Service Tax Authorities. On an intelligence, the officers of Directorate General of Central Excise, Delhi, now known as Directorate General of GST Intelligence [DGGSTI] alleged that the appellant had collected an amount of....
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....ries of decisions in support of her submissions that the penal charges are charged with the intention to make good for the losses and so as to act as a deterrent to ensure that terms of the contract are not violated by the buyer or the supplier. The details of the decisions are as under: (i) Hindustan Zinc Limited Vs. Commissioner of Central Goods, Service Tax and Central Excise, Customs, Udaipur [Final Order No.50025/2025 dated 01.01.2025-CESTAT, New Delhi.] (ii) Hindustan Zinc Limited Vs. Commissioner of Customs, Udaipur, Rajasthan [Final Order No.59733/2024 dated 4.11.2024 -CESTAT New Delhi.] (iii) Mangalam Cement Limited Vs. Commissioner of Central Goods Service Tax, Central Excise, Udiapur [Final Order No.585....
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....o. Ltd. Vs. Principal Commissioner, CGST & CE, Bhopal [2021(46) GSTL 409 (T-Delhi)] (xv) Rajcomp Info Service Ltd. Vs. Commissioner of Central Excise, Jaipur [2022 (65) GSTL 103 (Tri.-Del.)] (xvi) Dy. GM (Finance), BHEL Vs. Commissioner of Customs & Central Excise, Bhopal [2022 (9) TMI 1005 -CESTAT New Delhi.] (xvii) Steel Authority of India Ltd., Salem Vs. Commissioner of GST & Central Excise, Salem [2021 (7) TMI 1092 -CESTAT-Chennai] (xviii) Northern Coalfields Ltd. Vs. Commissioner of CGST, CE & Customs - Jabalpur [2023(1) TMI 934 -CESTAT New Delhi] (xix) Madhya Pradesh Power Transmission Company Ltd. Vs. Prinicpal Commissioner, CGST & CE, Bhopal [2023 (385) ELT 152 (Tri.-Del.)] (xx) ....
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....lty 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. 43. It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards "consideration" for "tolerating an act" leviable to service tax under section 66E(e) of the Finance Act." 5. The Revenue had challenged the said order before the Hon'ble Apex Court, however vide order dated 11.07.2023, the appeals filed by the Revenue were dismissed as withdrawn in vie....
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....t in certain transactions, the amounts received in the nature of liquidated damages/forfeited amounts from the contractors located outside India, i.e., in Canada, Hong Kong, Singapore, etc there cannot be any service tax liability on the alleged service of tolerating the act of delay in the hands of the appellant. The learned Counsel referred to the provisions of Rule 3 of the Place of Provision of Service Rules, 2012 as the recipient of the service would be located outside India and would, therefore, qualify as export, which cannot be taxed in India. Reference is also invited to the provisions of Section 64, which makes the Act applicable to the whole of India. Also, the provisions of Section 65B(52) of the Act defining 'taxable terri....