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2023 (6) TMI 1083 - AT - Service TaxLevy of Service Tax - Declared Service or not - amount received by the Appellant in excess of the purchase price paid for the immovable property, subsequent to cancellation of the agreement to Sale of the said property - HELD THAT:- The provisions contained in Section 66E(e) has been elaborately dealt by the co-ordinate Bench of the Tribunal in the case of M/S MADHYA PRADESH POORVA KSHETRA VIDYUT VITARAN COMPANY LIMITED VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, MADHYA PRADESH [2022 (4) TMI 773 - CESTAT NEW DELHI], wherein the judgment in the case of M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI] was relied by the Tribunal. It has been observed therein that there is a distinction between a “consideration under a contract” and the “compensation for failure to fulfill the contract”. It has also been held that while the consideration is paid for doing something by one party at the desire of the other party and is thus the result of the performance of the contract whereas, on the other hand, ‘compensation’ or damages is paid when one party fails to perform his part and is thus the result of frustration of contract and/or not performing the contract. In the present case, the appellant had paid the entire purchase price to the sellers who were in turn duty bound to carry out the development of the property within a reasonable period of time and immediately thereafter execute the Sale Deed in favour of the appellant. However, they failed to perform their part of the obligation - The appellant agreed to cancel the two agreements for a lump-sum payment, a portion of which was compensation, which can at best be said to be for the damages/compensation of loss of interest on funds invested solely due to the non-fulfilment on the part of the seller and its associates. The entire case of the Department for raising demand is that the appellant has received ‘compensation’ by way of cancellation of the subject agreement, which fact is on record and not in dispute. In view of the decision of the Tribunal in the case of Madhya Pradesh Poorva Kshetra Vidyut Vitaran Company Limited, which is squarely applicable to the facts of the present case, the receipt of compensation cannot, by any stretch of imagination, fall under the provisions of Declared Service under Section 66E(e) of the Finance Act. The impugned order cannot be legally sustained and hence, set aside - Appeal allowed.
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