TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 969
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....ure 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 Rs.34, 13, 05, 380/- in the form of fine....
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....sions 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.58512/2024 dated 5.9.2024-CESTAT, New Delhi] (iv) Bharat Alumin....
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....ntral 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) Ajmer Vidyut Vitaran Nigam Ltd. Vs. Principal Commissioner of CGST & Central Excise Jaipur [Final Order No.59900/2024 dated 26.11.2024.] 4. In the case of South Eastern Coalfields ....
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.... 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 view of the statement made by the learned ASG. The aforesaid view has been repeatedly followed by the Tribunal in subsequent decisions, referred to above and also in the case of the appellant it....
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.... 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 territory to mean the territory' to which the provisions of Chapter V of the Act applies. Therefore, the amount received from the contractors or vendors located abroad would be deemed to have been provide....