TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 170
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....uppression the facts and contravention of statutory provisions with intent to evade payment of Service Tax. However if the Service Tax so determined and interest is paid within a period of thirty days from the date of receipt of the Order in Original, the penalty payable shall be twenty five percent of said Service Tax amounting to Rs. 632989/- and reduced amount of penalty is also paid within the said period of 30 days." 2.1 The appellant is state level Co-operative organization owned by its member (Distt. Milk Unions). It works to promote the production, collection, processing, and sale of milk and milk products, to help improve the income and development of farmers and those involved in animal husbandry. They are having service tax registration for providing taxable services under the category of 'Business Support Service', 'Renting of Immovable Property Service' and 'Manpower Supply Service', and 'Security Service' and 'Legal Services'. 2.2 During audit of records of the appellant, it was observed that the appellants had shown income of Rs.74,38,283 under head of indirect income for the year 2015-16, and as per the details of other income provided by the appellants, they had ....
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.... * Amit Metaliks Limited vs. Commissioner of CGST, Bolpur 2020 (41) GSTL 325 (Tri.-Kolkata) 3.3 Learned Authorized Representative reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in the appeal and in the course of the arguments. 4.2 On merits of the issue, the impugned order observed as follows:- "5. I have carefully gone through the facts of the case and submissions made by the appellant in their appeal memorandums as well as during the course of personal hearing. The issue involved in the appeal is whether the appellant is liable to pay service tax on 'Earnest Money Forfeiture' amounts received during the period from February, 2015 to March, 2016. It has been alleged that the forfeited amount is a consideration for not executing the contractual obligation by the service provider either partly or fully therefore, the said amount forfeited is a consideration for tolerating the act of not performing the contractual obligation by the serviced provider, therefore, the amount received on this account is a consideration towards providing taxable declared service. 6. I find the appellant has....
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....can be subjected to service tax under section 66E (e) of the Finance Act has been decided by a Division Bench of the Tribunal in M/s South Eastern Coal Fields Ltd. Vs. Commissioner of Central Excise And Service Tax, Raipur which was subsequently followed by the Tribunal in M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. Vs. Principal Commissioner, CGST And Central Excise, Bhopal. 7. Learned counsel for the respondent is justified in submitting that the issue stands covered by the Division Bench judgement of the Tribunal in M/s South Eastern Coal Fields Ltd. The Division Bench observed as follows: "25. It is in the light of what has been stated above that the provisions of Section 66E(e) have to be analyzed. Section 65B(44) defines service to mean any activity 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 obligatio....
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....nalty is to ensure that the defaulting act is not undertaken or repeated and the same cannot be said to be towards toleration of the defaulting party. The expectation of the appellant is that the other party complies with the terms of the contract and a penalty is imposed only if there is non-compliance. 40. It is in this context and in the context of Section 74 of the Contract Act, that the Supreme Court observed : "20. Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of parties pre-determined, or where there is a stipulation by way of penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract for predetermining damages or providing for forfeiture of any property by way of penalty, the court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated." 8. The aforesaid decision of the Tribunal in M/s South Eastern Coal Fields Ltd. was followed by a Division Bench of....
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....ch of contract, payable to the aggrieved party. 7.1.2 Section 74 of the Contract Act, 1972 provides that when a contract is broken, if a sum has been named or a penalty stipulated in the contract as the amount or penalty to be paid in case of breach, the aggrieved party shall be entitled to receive reasonable compensation not exceeding the amount so named or the penalty so stipulated. 7.1.3 It is argued that performance is the essence of a contract. Liquidated damages cannot be said to be a consideration received for tolerating the breach or non-performance of contract. They are rather payments for not tolerating the breach of contract. Payment of liquidated damages is stipulated in a contract to ensure performance and to deter non-performance, unsatisfactory performance or delayed performance. Liquidated damages are a measure of loss and damage that the parties agree would arise due to breach of contract. They do not act as a remedy for the breach of contract. They do not restitute the aggrieved person. It is further argued that a contract is entered into for execution and not for its breach. The liquidated damages or penalty are not the desired outcome of the contract. By acc....
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....a 'supply' within the meaning of the Act, otherwise it is not a "supply". 7.1.6 If a payment constitutes a consideration for a supply, then it is taxable irrespective of by what name it is called; it must be remembered that a "consideration" cannot be considered de hors an agreement/contract between two persons wherein one person does something for another and that other pays the first in return. If the payment is merely an event in the course of the performance of the agreement and it does not represent the 'object', as such, of the contract then it cannot be considered 'consideration'. For example, a contract may provide that payment by the recipient of goods or services shall be made before a certain date and failure to make payment by the due date shall attract late fee or penalty. A contract for transport of passengers may stipulate that the ticket amount shall be partly or wholly forfeited if the passenger does not show up. A contract for package tour may stipulate forfeiture of security deposit in the event of cancellation of tour by the customer. Similarly, a contract for lease of movable or immovable property may stipulate that the lessee shall not terminate the lease be....