𝗖𝗘𝗦𝗧𝗔𝗧 𝗖𝗵𝗲𝗻𝗻𝗮𝗶 𝗥𝘂𝗹𝗶𝗻𝗴 𝗼𝗻 𝗟𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗲𝗱 𝗗𝗮𝗺𝗮𝗴𝗲𝘀 𝗮𝗻𝗱 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗧𝗮𝘅 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 📢 𝗧𝗵𝗲 𝗧𝗿𝗶𝗯𝘂𝗻𝗮𝗹 𝗵𝗲𝗹𝗱: "Forfeiture of earnest money deposit and liquidated damages received for tolerating delays is not liable to service tax as consideration for 'tolerating an act.'"

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗖𝗼𝗺𝗽𝗮𝗻𝘆: M/s. Bharat Heavy Electricals Limited 𝗜𝘀𝘀𝘂𝗲: Whether liquidated damages recovered by the appellant are subject to service tax under “tolerating an act.” 𝗔𝗰𝘁𝗶𝘃𝗶𝘁𝘆: The appellant recovered liquidated damages for delays in supply and service contracts but did not pay service tax on these amounts. A show-cause notice was issued for the period July 2012 to June 2017.

⚖️ 𝗝𝘂𝗱𝗴𝗲𝗺𝗲𝗻𝘁: The Tribunal ruled that liquidated damages or penalties do not qualify as consideration for tolerating an act under Section 66E(e) of the Finance Act, as established in South Eastern Coalfields Ltd. The impugned order was set aside, and the appeal was allowed.

📜 𝗖𝗮𝘀𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗧𝗶𝘁𝗹𝗲: M/s. Bharat Heavy Electricals Limited vs. The Commissioner of G.S.T. and Central Excise 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗧𝗮𝘅 𝗔𝗽𝗽𝗲𝗮𝗹 𝗡𝗼. 42493 of 2018 𝗢𝗿𝗱𝗲𝗿 𝗗𝗮𝘁𝗲: 26 April 2023 📜 This ruling confirms that liquidated damages for contractual delays are not subject to service tax.