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2021 (2) TMI 1150 - AT - Service TaxLevy of service tax - recovery of certain amounts from its supplier which in view of the Revenue are in the nature of liquidated damages for compensating the appellant against the poor quality of material supplied to the appellant by its supplier - Section 66(E)(e) of the Finance Act, 1994 - HELD THAT:- The facts are not in disputed that amount recovered by the appellant is towards the poor quality of goods purchased by them. The appellant have taken the ground before the Adjudicating Authority as well as Commissioner (Appeals) that the amount which they have received is in the form of “liquidated damage” and not in the form of “consideration” towards any service for the reason that the said amount is for supply of lower quality of goods and thus the effect is only reduction in the transaction value of the goods. However, this vital point raised by the appellant has not been considered either by the Adjudicating Authority or by the first appellate authority. Both the authorities also have not dealt with the distinction between the ‘liquidated damage’ as claimed to have received by the appellant and the ‘consideration’, which department want to impose. Both the terms have been defined legally separately in the Indian Contract Act, 1872. Time Limitation - HELD THAT:- The same has also not been considered on its true facts and the legal issue involved in the present case. Since the issues have not been dealt in a proper manner by both the lower authorities, the matter needs to be reconsidered as a whole - Appeal allowed by way of remand.
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