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2023 (12) TMI 904 - AT - Service TaxLevy of service tax - earnest money deposit/security deposit - liquidated damages collected by the appellant - service in the nature of “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act” as defined under section 66E (e) of Finance Act or not - HELD THAT:- In M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI], the Tribunal held that since liquidated damages recovered on account of breach or non-performance of contract are not consideration for any service, but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated service tax would not be leviable on the amount so collected. The Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs also provides that service tax cannot be levied on the amount collected for the said purpose. In view of the aforesaid decision of the Tribunal in South Eastern Coalfields and the Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs, the contention advanced by the learned counsel for the appellant has to be accepted. It is, therefore, not possible to sustain the demand. The order dated 25.06.2019 passed by the Commissioner (Appeals) is, accordingly, set aside - Appeal allowed.
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