Service Tax
TRT-2025-
Cestat Chandigarh
Date:-26-04-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 26 April 2023
Parties: M/s. Bharat Heavy Electricals Limited Vs The Commissioner of G.S.T and Central Excise
Facts –
- The Appellant, M/s. Bharat Heavy Electricals Limited, is a public sector undertaking engaged in the manufacture of heavy engineering equipment such as boiler and boiler components and is also engaged in the service of erection / commissioning of power plants / projects.
- A show cause notice was issued alleging that during the period from July 2012 to June 2017, the appellant is charging and recovering Liquidated Damages for delay in supply and service contract as per the written agreements between them but did not pay the Service Tax on it
Issue –
- Whether the Liquidated Damages received by the appellant would be liable to Service Tax?
Order –
- The Tribunal observed that the similar issue of the assessee has been settled in the favour of the assessee.
- In the order in the case of M/s. South Eastern Coalfields Ltd. the Learned Delhi Bench has analysed the scope and ambit of Sections 65B (44), 66E (e) and 67 (1) of the Act and they have also analysed and applied various decisions of the Hon’ble Apex Court and thereafter, has concluded that the view of the Principal Commissioner therein that the penalty amount, forfeiture of earnest money deposit and liquidated damages received by the appellant therein towards “consideration” for “tolerating an act” as being amenable to Service Tax under Section 66E (e) of the Finance Act, was not sustainable.
- Thus, the impugned order cannot sustain, the impugned order is set aside and the appeal is allowed.
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