Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-10-01-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 10 January 2023
Parties: M/s.Krishak Bharti Co Operative Ltd Vs C.C.E. & S.T.-Surat-i
Facts –
- The Appellant, M/s. Krishak Bharti Co Operative Ltd, is engaged in the manufacture of fertilizers. The appellant assigned work order to various companies which is time based contract with price reduction clause for delay in completion of work.
- The appellant also employed trainees, the employment contract has various conditions put on the trainees. In case the trainee breaches any of those conditions, a specific amount is recoverable from the trainees.
Issue –
- Whether the appellant is liable to pay Service Tax on amount recovered from breach of contract?
Order –
- The Tribunal held that the CBIC has issued a circular No.178/10/2022-GST dated 3rd August, 2022 in which it has stated its stand on the issue of taxability of various transactions claimed to be “liquidated damages”. The circular also clarified the stand of CBIC on the issue of forfeiture of salary or payment of bond made in the event of employee leaving the employment before the minimum agreed period.
- Prime facie Para 5(e) of Schedule-II of CGST Act, is identically worded as Section 66E(e) of the Finance Act, 1994. The circular expresses the stand of CBIC in case of GST on an interpretation of an identical expression.
- It was observed that the circular was not available to the adjudicating authority when the matter was decided, hence the impugned order is set aside and the matter is remanded to the original adjudicating authority.
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