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2024 (1) TMI 676 - AT - Service TaxLevy of service tax - amount deducted by the appellant from the vendors towards liquidated damages - failure to supply the goods/execute the work within the stipulated time - demand of service tax both for the period prior to 01.07.2012 and post 01.07.2012 - HELD THAT:- For the period prior to 01.07.2012 collection of amount towards liquidated damages was not included in any of the specified taxable services under any of the clauses of sub-section (105) of section 65 of the Finance Act, 1994 [the Finance Act]. Thus, no service tax could have been levied on the amount of liquidated damages so collected - For the period w.e.f. 01.07.2012, the impugned order has observed that as the appellant received the amount as consideration for the failure on the part of the contractors to honor the terms of the contract or violating the conditions of the contract, it would be taxable under clause (e) of section 66E of the Finance Act. 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 liquidated damages recovered on account of breach or non-performance of contract are not consideration in view of any service but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated. It is, therefore, not possible to sustain the demand - The order dated 16.11.2018 passed by the Commissioner, therefore, deserves to be set aside - Appeal allowed.
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