𝗖𝗘𝗦𝗧𝗔𝗧 𝗡𝗲𝘄 𝗗𝗲𝗹𝗵𝗶 𝗥𝘂𝗹𝗶𝗻𝗴 𝗼𝗻 𝗟𝗶𝗾𝘂𝗶𝗱𝗮𝘁𝗲𝗱 𝗗𝗮𝗺𝗮𝗴𝗲𝘀 𝗮𝗻𝗱 𝗥𝗶𝗴𝗵𝘁 𝘁𝗼 𝗨𝘀𝗲 𝗡𝗮𝘁𝘂𝗿𝗮𝗹 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀 📢 𝗧𝗵𝗲 𝗧𝗿𝗶𝗯𝘂𝗻𝗮𝗹 𝗵𝗲𝗹𝗱: "Liquidated damages for breach of contract and charges for the right to use natural resources (before 01.04.2016) are not taxable under service tax."

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗖𝗼𝗺𝗽𝗮𝗻𝘆: M/s. The Madhya Pradesh State Mining Corporation Limited 𝗜𝘀𝘀𝘂𝗲: Whether liquidated damages, royalties, and area development charges are liable for service tax? 𝗔𝗰𝘁𝗶𝘃𝗶𝘁𝘆: The appellant, granted mining rights by the Madhya Pradesh State Government, was accused of evading service tax on income from forfeitures, royalties, director fees, and area development charges.

⚖️ 𝗝𝘂𝗱𝗴𝗲𝗺𝗲𝗻𝘁: The Tribunal ruled that liquidated damages collected for breach of contract and area development charges allocated for administrative expenses are not taxable. Additionally, charges for the right to use natural resources before 01.04.2016 are not subject to service tax. The demand was set aside, and the appeal was allowed.

📜 𝗖𝗮𝘀𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗧𝗶𝘁𝗹𝗲: M/s. The Madhya Pradesh State Mining Corporation Limited vs. Pr. Commissioner, CGST & Central Excise 𝗦𝗘𝗥𝗩𝗜𝗖𝗘 𝗧𝗔𝗫 𝗔𝗣𝗣𝗘𝗔𝗟 𝗡𝗢. 52226 OF 2019 𝗢𝗿𝗱𝗲𝗿 𝗗𝗮𝘁𝗲: 24 April 2023 📜 This ruling clarifies that liquidated damages and charges for rights to use natural resources (before taxation was introduced) are not liable for service tax.