M/S South Eastern Coal Fields Ltd vs Cce & St, Raipur on 23 November, 2016
In the context of levy of tax on the amount of damages received from the
suppliers, on account of material breach of the terms and conditions of the
contract, such issue had fell for consideration of the Tribunal in the case of South
Eastern Coal Fields Ltd. vs. Commissioner of Central Excise and Service Tax,
Raipur (supra). The revenue had fastened upon South Eastern Coal Fields Ltd. -
the appellant, a liability under Section 65B read with Section 66E(e) of the
Finance Act for the period from July 2012 till March 2016 on the ground that by
collecting the said amount, the appellant had agreed to the obligation to refrain
from an act or to tolerate the non-performance of terms of contract by the other
party. Referring to the decision of the Supreme Court in Commissioner of
Service Tax vs. M/s. Bhayana Builders (P.) Ltd.25 wherein it was held that any
amount charged which has no nexus with the taxable service and which is not a
consideration for the services provided, does not form part of the value which is
taxable under Section 67 of the Finance Act.