No Service Tax on Compensation for tolerating non-performance of contractual terms

Northern Coalfields Ltd. Vs Commissioner CGST (CESTAT Delhi)

The Central Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, allowed the appeal filed by Northern Coalfields Limited (NCL) against the Commissioner’s order demanding service tax, interest, and penalty. The dispute centered on whether amounts received by NCL as compensation/penalty from coal buyers for short-lifted/un-lifted coal, from contractors for breach of contract, and as liquidated damages from suppliers constituted a taxable “declared service” under Section 66E(e) of the Finance Act, 199

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