Service tax demand on liquidated damages set aside by the Tribunal
Issues for consideration before the Tribunal
The point of dispute before the Tribunal was whether service tax could be demanded under Section 66E(e) of the erstwhile Chapter V of the Finance Act, 1994 (‘service tax law’) i.e., toleration of an act, in respect of the following:
- Liquidated damages from the suppliers of materials for breach of the terms and conditions of the contract.
- Compensation/penalty from the contractors for breach of the terms and conditions of the contract.
- Compensation/penalty from the buyers of coal on the short-lifted/un-lifted quantity of coal and non-compliance of the terms and conditions of the coal supply agreement, including forfeiture of earnest money deposit/security deposit.
