No Service Tas on Amount Recovered Towards Penalties: CESTAT Delhi

AVVNL Vs Principal Commissioner of CGST & Central Excise (CESTAT Delhi) The CESTAT Delhi addressed an appeal by AVVNL, a public sector company, challenging a service tax demand of Rs. 2,39,18,841/-. This demand was levied on amounts AVVNL recovered as “Penalty” and “Recovery” from suppliers for breaches of contract, such as delivery delays and short-weighted goods, between April 2013 and June 2017. The revenue argued that these recoveries constituted consideration for “declared services” under Section 66E(e) of the Finance Act, 1994. AVVNL contested this...