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Whether ST to be levied on Liquidated damages recovered from contractors - Reg

Service Tax - Started By: - CMA VENKATESHAM MUTA - Dated:- 25-7-2016 Last Replied Date:- 27-7-2016 - Sir/Madam,Please guide me, whether ST should be recovered from the following issue.Company A, issued a tender to supply an inventory, and company B is supplying the same. As per the tender, delay in supply will attract Liquidated damages and company A will recover the same from the Company B.Liquidated damages (LD) recovered from the Vendor/Contractor is on account of the breach of contract and n .....

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UMAR - The Reply = Mr.Venkatesham, This is a subject matter prone to litigation inasmuch as the department may take a stand that it is covered under Section 66E(e) as declared service. But a Broader interpretation would reveal that the same is not covered under declared services as these are penal/compensatory charges not part of the gross consideration. It is covered in one case law viz., M/s.Religare Securities Ltd. V/s Commissioner of Service Tax, Delhi 2014 (4) TMI 588 - CESTAT NEW DELHI. Mo .....

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