TaxTMI 
TaxTMI 
2025 (1) TMI 1538
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....m the bills of the contractors in lieu of tolerating the various acts like poor performance or not meeting the obligations in full. Thus, as the amount was retained through forfeiture of earnest money/security deposits, the show cause notice alleges that the appellant has generated the amount by tolerating the acts of service rendered by the service provider/contractors. 3. The Commissioner (Appeals) has confirmed the demand and the relevant portion of the order is reproduced below: "5.1. I find that the appellant shown miscellaneous income 4,48,22,188/- during the period April 2013 to March 2016 on account of amount of 'SD/EMD forfeited and amount of 'fine/penalties recovered' from various contractor's who failed to comply with the condition of contracts within the specified time or non compliance of any condition of contracts in their trial balance sheet. I further find that the amount collected by the appellant, the 'promisor', from their clients/contractors the 'promisee', tolerated the situation by failing to comply with the condition of contracts within the specified time or non compliance of any condition of contracts, as a result ....
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....the decision of this Tribunal in the matter of the appellant itself in M/s Hindustan Zinc Limited versus Commissioner of Customs, Udaipur (Rajasthan) 2024 (12) TMI 11-CESTAT NEW DELHI as also the decision of the Tribunal in South Eastern Coalfields Limited versus Commissioner of Central Excise & Service Tax, Raipur 2021 (55) GSTL 549 (Tri.-Del.). 5. Shri Harshvardhan, learned authorized representative appearing for the appellant, however, placed reliance upon the Board Circular dated 28.02.2023 issued by the Central Board of Indirect Tax & Customs relating to the provision of section 66E (e) of the Finance Act. Learned authorized representative also placed on record the order dated 11.07.2023 passed by the Supreme Court in the appeal that had been filed by the department against the decision of the Tribunal rendered in South Eastern Coalfields Limited. Learned authorized representative pointed out that in view of the statement made by the learned Additional Solicitor of India that that he has instruction to withdraw the appeal, the appeal was dismissed as withdrawn by the Supreme Court by order dated 11.07.2023. 6. The submissions advanced by the learned counsel for appellant....
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....ivity 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 consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. In other words, the agreement should not only specify the activity to be carried out by a person for another person but should specify the: (i) consideration for agreeing to the obligation to refrain from an act; or (ii) consideration for agreeing to tolerate an act or a situation; or (iii) consideration to do an act. 26. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a "declared service" under section 66E(e) read with section 65B (44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services concei....
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.... The activities, therefore, that are contemplated under section 66E (e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. xxxxx xxxxx xxxxx xxxxx 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. (emphasis supplied) 12. The aforesaid decision of the Tribunal in South Eastern Coalfields Limited was followed by the division bench of the Tribunal in the matter of the appellant itself in the decision rendered on 04.11.2024, and the relevant portion of the decision is reproduced below:- "10. From the perusal of these decisions it becomes abundantly clear that the issue of considering a forfeited amount as an amount of consideration towards declared services stands already settled in favour of the assessee. The....