Custom, Excise & Service Tax Tribunal
Jsw Energy Ltd vs Commissioner Of Central Tax And Central ... on 3 October, 2024
Service Tax Appeal No.20604/2019
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
1st Floor, WTC Building, FKCCI Complex, K. G. Road,
BANGLORE-560009
Regional Bench COURT-2
Service Tax Appeal No.20604 of 2019
[Arising out of the Order-in-Original No.BEL-EXCUS-000-COM-BKK-017-2018-19
(ST) dated 14.03.2019 passed by the Commissioner of Central Tax (CGST) &
Central Excise, Belgaum.]
M/s. JSW Energy Limited,
Post Box No.9, Village & Post Toranagallu,
Sandur Taluk, Bellary - 583 123
Karnataka .........Appellant
VERSUS
Principal Commissioner of Central Tax
and Central Excise,
No.71, Club Road,
Belgaum - 590 001. .....Respondent
Appearance:
Mr. Gopal Mundhra, Advocate Appeared for Appellant Mr. M.A. Jithandra, Authorized Representative for Respondent Coram:
Hon'ble P.A. Augustian, Member (Judicial) Hon'ble Pullela Nageswara Rao, Member (Technical) FINAL ORDER No._ 20940 _ __ of 2024 Date of Hearing: 29.04.2024 Date of Decision: 03.10.2024 Per: P.A. Augustian The issue in the present Appeal is regarding the service tax liability on the amount received towards liquidated damages.Page 1 of 5
Service Tax Appeal No.20604/2019
2. The brief facts are, during Audit for the period from July 2015 to June 2017, it is observed that the Appellant, who is generating power had entered into various Power Purchase Agreements (PPAs) with different customers in connection with sale of electrical energy and as per the clause of the agreement, a provision is made for the payment of liquidated damages for failure to supply the indented capacity. In terms of clause, procurer/customer is required to pay compensation, if they violate the terms and conditions of the agreement. Since the compensation amount/liquidated damage received by the Appellant is falling under the category of declared service in terms of provisions of Section 66E(e) of the Finance Act, 1994, proceedings were initiated and as per impugned order dated 14.03.2019, the Adjudication authority confirmed the demand of service tax with interest and imposed penalty of equal amount. Aggrieved by the impugned order, present appeal is filed.
3. When the appeal came up for hearing, Learned Counsel for the Appellant submits that the issue in the impugned order is no longer res Integra as it is held in large number of decisions, that liquidated damages/penalty for short lifting of goods cannot be considered towards any service per se, since neither the assessee is carrying on any activities to receive compensation nor there can be any intention of the other party to breach or violate contract and suffer a loss and penalty provisions stipulated in the contract for short lifting of goods cannot be considered as a consideration towards any service liable to service tax. The learned counsel relied on the following decisions in support of their claim.
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Service Tax Appeal No.20604/2019 i. M/s Bhayana Builders (P) Ltd Vs. Commissioner of Service Tax, Delhi (2013 (32) STR 49) ii. Commissioner of Customs & Central Excise Hyderabad-IV Vs. M/s Victory Electricals Ltd (2013 (298) E.L.T 534 (Tri.LB) iii. Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd., Order No. 13/2018 dated 18.09.2018 iv. M/s TP Ajmer Distributors Ltd.,
-RAJ/AAAR/02/2018-19 dated 18.10.2018 v. M/s United Telecom Ltd Vs. Commissioner of C.Ex, Bangalore-2006 (204) E.L.T 626 (Tri.Bang) vi. M/s Bhagwati Power & Steel Ltd Vs. Commissioner of Central Excise, Raipur (Service Tax Appeal No. 50460/2018) vii. M/s Bharat Aluminium Company Ltd Vs. Principal Commissioner, CGST, Central Excise, Raipur (Service Tax Appeal NO. 50800 of 2020) viii. M/s SouthEastern Coalfields Ltd., Vs. Commissioner of Central Excise & Service Tax, Raipur (2020 (55) GSTL 549 (Tri.Del) ix. M/s Neyveli Lignite Corporation Ltd Vs. Commissioner of Customs, Central Excise & Service Tax, Chennai (2021 (53) GSTL 401) (Tri. Chennai) x. M/s Western Coalfields Ltd Vs. Commissioner of CGST & Central Excise, Nagpur (2023) 4 Centax 271 (Tri. Bom) xi. M/s Pradip Port Trust Vs. Commissioner of CGST & Excise, Bhubaneshwar (2022 (62) GSTL 186 (Tri. Kolkata) Page 3 of 5 Service Tax Appeal No.20604/2019 xii. Final Order No.50128/2024 dated 17.01.2024 in the matter of M/s Bharat Aluminum Company Ltd
4. The Learned Counsel also relied on the Circular No. 214/1/2023- ST dated 22.02.2023 and submits that liquidated damages paid towards short lifting of power cannot be subject to service tax under Section 66E(e) of the Finance Act, 1994. The Learned Counsel further submits that there is no suppression of facts to invoke the extended period of limitation, since the issue is of interpretation. The Learned Counsel also relied on the following decisions:
i. M/s Pushpam Pharmaceuticals Company Vs. Collector of C.Ex, Bombay-1995 (78) E.L.T 401 (SC) ii. M/s Tamil Nadu Housing Board Vs. Collector of Central Excise, Madras -1994 (74) E.L.T 9 (SC) iii. M/s Pahwa Chemicals Pvt Ltd Vs. Commissioner of Central Excise, Delhi -2005 (189) E.L.T 257 (SC)
5. Learned Authorised Representative (AR) for the Revenue reiterated the findings in the impugned order.
6. Heard both sides and perused the records.
7. We are of the view that the Adjudication authority has no reason to confirm demand of service tax on the amount received by the Appellant as compensation for short lifting of electricity, since it was not on account of any obligation to tolerate an act, hence is not a service under Section 66E(e) of the Finance Act, 1994, Hence, the impugned order deserves to be set aside.
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Service Tax Appeal No.20604/2019
8. In view of the above discussion and following the ratio of the above judgements/decisions the impugned order is set aside with consequential relief, if any in accordance with law.
(Order Pronounced in Open court on 03.10.2024) (P.A. Augustian) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) Ganesh Page 5 of 5