Case Law Details
Bharat Heavy Electricals Limited Vs Commissioner of G.S.T (CESTAT Chennai)
Introduction: In a recent order by the Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bharat Heavy Electricals Limited (BHEL) received relief as the tribunal ruled that liquidated damages are not liable to service tax. This order clarifies the taxability of liquidated damages under service tax laws.
Detailed Analysis:
1. Background of the Case: Bharat Heavy Electricals Limited (BHEL) had been paying service tax under the forward charge mechanism for various services, including commercial training or coaching, renting of immovable property, technical inspection, and certification agency services, among others. Additionally, they were also paying service tax as service recipients under the reverse charge mechanism.
2. Discovery of the Issue: The revenue authorities initiated an inquiry based on specific intelligence, revealing that BHEL was charging and recovering liquidated damages from suppliers and service providers for delays in supply and service contracts. However, BHEL had not paid service tax on these recovered liquidated damages.
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