TMI Blog2023 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity and there is a flow of consideration for this activity. The decision rendered in appellants own case vide Final Order No. 50879/2022 dated 20.09.2022 in Service Tax Appeal No. 50080 of 2019 [ 2022 (9) TMI 1005 - CESTAT NEW DELHI ], however for Bhopal unit with respect to goods and transport service , is also about the same issue holding the receiving liquidated damages due to violation of terms of contract does not amount to any such act as may be called as declared service. The amount cannot be made liable to tax in the name of it being consideration for providing deemed service. Demand set aside - appeal allowed. - SERVICE TAX APPEAL NO. 51006/2019 - FINAL ORDER No.50329/2023 - Dated:- 16-2-2023 - Dr. RACHNA GUPTA, MEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Harshvardhan, learned Authorised Representative for the department. 4. Learned Counsel for the appellant has mentioned that the issue as admitted by the adjudicating authority itself is as to whether the recovery of liquidation damages during the period in question can be covered under the ambit of declared services as defined in section 66E(e) of the Finance Act, 1994. Learned Counsel has mentioned that the issue is no more res integra. Reliance has been placed on the following cases: (i) Dy. GM Finance, BHEL Vs. Commissioner of Customs Central Excise, Bhopal, Final Order No. 50879/2022 dated 20.09.2022 passed by the Hon'ble CESTAT, New Delhi in Service Tax Appeal No. 50080 of 2019; (ii) Steel Authority of India Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as follows : 25. It is in the light of what has been stated above that the provisions of section 66E(e) have to be analyzed. Section 65B(44) defines service to mean any activity carried out by a person for another for consideration and includes a declared service. One of the declared services contemplated under section 66E is a service contemplated under clause (e) which service is agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. There has, therefore, to be a flow of consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. In other words, the agreement should not only specify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the intention of the appellant to impose any penalty upon the other party nor is it the intention of the other party to get penalized. 28. It also needs to be noted that section 65B(44) defines service to mean any activity carried out by a person for another for consideration. Explanation (a) to section 67 provides that consideration includes any amount that is payable for the taxable services provided or to be provided. The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for providing deemed service. 9. We also observe that even the decision as relied upon by the department passed after the Circular dated 03.08.2022, it has been held that though the circular emphasized that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another. While discussing in detail the scope of ambit of the definition of service under section 65B(44) and definition of declared service under sub-section (e) of Section 66(E) of the Act has been discussed to decide the issue in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
