CESTAT set aside service tax demand on Liquidated Damages/EMD Forfeiture etc.

South Eastern Coalfields Ltd. Vs Commissioner of Central Excise and Service Tax (CESTAT Delhi) The Principal Bench of Hon’ble CESTAT set aside the Service Tax demand of Rs. 32.76 Crores approx., plus equal penalty and applicable interest, on the amount of Liquidated Damages / Forfeiture of EMD / Penalty recovered from the various contractors & suppliers / Coal buyers under FSA and coal e-Auction scheme. The said demand was raised by invoking the provisions contained in Section 66E(e) as ‘Declared Service’ which reads as “agreeing to an obligation or to refrain from an act or to tol...