Case Law Details
Amit Metaliks Limited Vs Commissioner of Central Goods & Service Tax (CESTAT Kolkata)
As far as the compensation received from M/s Amit Mines is concerned, the Show Cause Notice mentions the leviablity of Service tax on the amount received towards the compensation for non supply of the agreed quantity of manganese ore under Section 64E(e) of Finance Act which is even otherwise is purely the transaction sale of the iron ore to the Appellant by M/s Amit Mines. Thus, the compensation amount is towards default on the sale of the goods. The sale could not be effected and, therefore, Appellant received the liquidated damage by way of raising the debit note which was honoured by M/s AML. Thus, this amount of compensation/ liquidated damage cannot be treated as service under Section 64 E(e) of the Act. The demand is thus not sustainable on this aspect also.
FULL TEXT OF THE CESTAT JUDGMENT
1. This appeal is filed by M/s Amit Metalics Limited (hereinafter referred to as the Appellant/AML) Durgapur, West Bengal against the Order-in-Original No. 29/Commr./ ST/BOL/17-18 dated 31/01/2018 passed by the Commissioner of Central Goods and Service Tax, Bolpur (for short “ the Adjudicating Authority”) by which the demand of service tax amounting to Rs. 51,17,63,188/- along with equivalent penalty and applicable interest has been confirmed under the provisions of Finance Act, 1994 ( for short “the Finance Act”). This demand has been raised in terms of Show Cause Notice, F No. 99/KZU/KOL/GR.C/14 dated 28/12/2016, issued by the Directorate General of Central Excise Intelligence for the period 2012-13.
2. The issue involved in this appeal is as to whether the amount of Rs. 45,08,09,200/- paid to the Appellant as per ‘Settlement Agreement’ and the compensation received by the Appellant from M/s Amit Mines Limited (hereinafter referred to as ‘Amit Mines/AML’) to the extent of Rs. 1,97,50,000/- for non supply of manganese ore on account of rate difference are liable for service tax under ‘Declared Service’ under Section 66 E(e) of the Finance Act or otherwise. The Appellant is engaged in the business of manufacture and sale of M.S. Billets and M.S. Rods, TMT bars etc., classifiable under tariff item 72 to the First schedule of Central Excise Tariff Act, 1985, for which they are duely registered with the Central Excise authorities under the provisions of Central Excise Act, 1944 (for short “the Act”) and Rules made thereunder. The appellant is also registered with the service tax department in accordance with provisions of Finance Act and the Rules made thereunder for the services being rendered by them.
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