Custom, Excise & Service Tax Tribunal
South Eastern Coalfields Ltd vs Raipur on 21 September, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. IV
SERVICE TAX APPEAL NO. 52188 OF 2018
[Arising out of the Order-in-Appeal No. BHO-EXCUS-002-APP-84-2018-19
dated 24/04/2018 passed by The Commissioner (Appeals), CGST & Central
Excise, Raipur.]
M/s South Eastern Coalfields Limited, Appellant
Raigarh Area, Area Finance Manager,
Chhote Atarmuda,
Raigarh - 495 006 (Chhattisgarh).
VERSUS
Commissioner, CGST & Central Excise, Respondent
Kendriya Utpad Shulk Bhawan, Dhamtari Road, Raipur, Chhattisgarh - 492 001.
WITH SERVICE TAX APPEAL NO. 52195 OF 2018 [Arising out of the Order-in-Appeal No. BHO-EXCUS-002-APP-83-2018-19 dated 24/04/2018 passed by The Commissioner (Appeals), CGST & Central Excise, Raipur.] M/s South Eastern Coalfields Limited, Appellant Raigarh Area, Area Finance Manager, Chhote Atarmuda, Raigarh - 495 006 (Chhattisgarh).
VERSUS Commissioner, CGST & Central Excise, Respondent GST Bhawan, Dhamtari Road, Raipur, Chhattisgarh - 492 001.
APPEARANCE Shri Rajeev Agarwal, Advocate - for the appellant. Ms. Jaya Kumari, Authorized Representative for the Department. CORAM:
HON'BLE DR. MS. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 51378-51379/2023 DATE OF HEARING/DECISION : 21.09.2023.
2 ST/52188 OF 2018 RACHNA GUPTA Present order disposes of two appeals arising out of same order and pertaining to the same assessee. The facts, in brief, are as follows :
The appellant herein is engaged in production and clearance of "Coal". They are holding service tax registration for providing various services namely Goods Transport Agency Services, Renting of Immovable Property Service, Works Contract Service, Legal Consultancy service, Security Agency Service, Rent a Cab Operator Service etc. While auditing the accounts of the appellant for the period from March 2011 to March 2014 it was observed that the appellant has recovered total amount of Rs. 6,41,59,866/- towards penalty/liquidated damages recovered from their customers and contractors during the period July 2012 to March 2014. On being asked, the appellant conveyed that the amount were recovered/forfeited as penalty or liquidated damages recovered from the customers who failed to lift the quantity of coal allotted to them and from the contractors who did not supply the goods within the stipulated period of time as per the agreement.
2. The agreements were provided to the Department vide appellant‟s letter dated 24.10.2013. The Department formed the opinion that the activities undertaken by the appellant, which were the source of the impugned income, are a declared service 3 ST/52188 OF 2018 under Section 66E (e) and they are not covered under the negative list of services as is specified under section 66D of Finance Act, 1944 made applicable from 1st July, 2012. Hence, vide show cause notice No. 15/2016 dated 12.03.2016, service tax amount of Rs. 1,21,77,295/- covering the total period from July 2012 to September 2015 was proposed to be recovered along with the interest and the appropriate penalties. The said proposal was confirmed vide the order-in-original No. 34/2017 dated 31.03.2017. Being aggrieved, the appellant preferred two separate appeals bearing No. 184/2017 and Appeal No. 179/2017 which have been disposed of by the Commissioner (Appeals) vide two separate orders bearing No. 83/2018-19 and 84/2018-19 respectively both dated 24.04.2018. Except that the quantum of penalty confirmed by Adjudicating Authority was reduced to 50% of the service tax so determined, the demand has been upheld.
Being aggrieved, the appellant is before this Tribunal.
3. We have heard Shri Rajeev Agarwal, learned counsel for the appellant and Ms. Jaya Kumari, learned Departmental Representative for the Revenue.
4. Learned counsel for the appellant has submitted that the issue involved in the present appeal is whether the service rendered by the appellant can be called as „declared service‟ under Section 66E (e) of Finance Act, 1994 which reads "agreeing to the obligation to recover from an Act or to start an Act or a situation, or to do an Act", introduced in the statute 4 ST/52188 OF 2018 w.e.f. 1st July 2012. It is also mentioned that the said issue stands already decided in favour of the appellant/assessee by this Tribunal vide the final order No. 51651 of 2020 dated December 22, 2020 in appellant‟s own case in Service Tax Appeal No. 50567 of 2019. The present appeals are also prayed to be allowed in terms of the said order.
5. Learned Departmental Representative has conceded the said decision of the Principal Bench of this Tribunal, however, she still has impressed upon the findings arrived at by Commissioner (Appeals), while praying for dismissal of appeal.
6. Having heard both the parties and perusing the record of both these appeals and also having perused the final order of this Tribunal relied upon by the learned counsel for the appellant and conceded by the department, we observe and held as follows :
7. The meaning of service under section 65B (44) of Finance Act and that of declared service under Section 66 E(e) of the Act have thoroughly been discussed in the said decision. Not only this, the statutory provisions with respect to the definition of taxable value and that of consideration have also been discussed; we also observe that the said final order has considered the following decisions :-
(i) Commissioner of Service Tax versus M/s Bhayana Builders1 ;
(ii) Food Corporation of India versus Surana Commercial Co. and others2 1 2018 (2) TMI 1325 2 (2003) 8 SCC 636 5 ST/52188 OF 2018
(iii) Societe Thermale d'Eugenic-les-Bains versus Ministere de I'Economie, des Finances et de I'Industrie
(iv) M/s K.N. Food Industries Pvt. Ltd. versus Commissioner of CGST and Central Excise, Kanpur3
(v) M/s Lemon Tree Hotel versus Commissioner, Goods and Service Tax4
(vi) Commissioner of Service Tax, Chennai versus M/s Repco Home Finance Ltd.5
(vii) GE T & D India Limited versus Deputy Commissioner of C. Ex., Chennai6
(viii) Fateh Chand versus Balkishan Das7 After considering the various provisions of Indian Contract Act therewith, it has been held that liquidated damages/ compensation for the breach of contract can be awarded to make good the loss or damage which actually arises or which the parties knew when they made the contract, "to be likely to result from the breach". Hence it cannot be concluded that sum received is synonymous to "tolerating". It is absolutely wrong to say that in breach of contract one appellant tolerates an Act or a situation, hence, the view taken by the Commissioner (Appeals) that the liquidated damages as have been received by the appellants towards "consideration" for "tolerating the Act" are leviable to service tax under section 66 E(e) of Finance Act is not at all sustainable.
3
2019 - TIOL - 3651 - CESTAT - ALL 4 2020 - TIOL - 1114 - CESTAT - DEL.
5ST Appeal No. 511 of 2011 (LB) decided on June 6, 2020 6 2020 (35) G.S.T. 89 (Mad.) 7 AIR 1963 SC 1405 6 ST/52188 OF 2018
7. In the fact of both the present appeals, we find that the facts are almost identical. There appears nothing for us to differ from the above observations in the afore-mentioned final order of the said Tribunal. Respectfully, following those findings we hold that the amount in question cannot be called as consideration towards declared service as defined under Section 66E (e) of the Finance Act. The confirmation of tax demand qua said amount is therefore not sustainable. Resultantly we hereby set aside the order under challenge. Both the appeals accordingly stand allowed.
(Order dictated and pronounced in open court.) (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK