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Case Law Details

Case Name : Krishnapatnam Port Company Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)
Appeal Number : Service Tax Appeal No. 30227 of 2016
Date of Judgement/Order : 25/04/2022
Related Assessment Year :
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Krishnapatnam Port Company Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)

Issue of leviability of Service tax on penalty, liquidated damages, compensation, forfeiture amounts, cancellation charges etc. stands settled by various pronouncements wherein it has consistently been held that the said amounts recovered as charges for breach or non-compliance of contractual terms and conditions cannot be construed as ‘consideration’ for ‘refraining or tolerating an act’ and were thus not leviable on Service Tax in terms of Section 66E(e) of the Finance Act, 1994.

FULL TEXT OF THE CESTAT HYDERABAD ORDER

The Appellant is engaged in rendering ‘Port Services’ to importers and exporters and vide Agreement dated 12.07.2011, entered into a contract with M/s. Simhapuri Energy (P) Ltd. (hereinafter referred to as the ‘service recipient’) wherein the service recipient agreed to import a specified quantity of coal in a specified period of time and the Appellant agreed to render ‘port services’ for the same for a consideration. The said Agreement also provides for payment of penalty/liquidated damages/’compensation charges’ of Rs.100/MT by the services recipient in the event of failure to achieve the ‘Minimum Guaranteed Tonnage’ [hereinafter referred to as MGT]. The relevant extract is reproduced below for ready reference:

“6.5 SEPL/PTC commits minimum volumes as under from the date of NTP and KPCL agrees for the facilities accordingly:-

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One Comment

  1. Tapan Kumar Nath says:

    I am retired CGST Officer I have been regular reading the articles, Views of C.A’s and Case Laws etc. which are very knowledgeable and useful for coating while submission of any reply to Show Cause Notice.

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