The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax on liquidated damages against Bharat Heavy Electricals Limited (BHEL).The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has set aside the demand for service tax on liquidated damages.The appellant/assessee is paying service tax under forward charge on...
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax on liquidated damages against Bharat Heavy Electricals Limited (BHEL).
The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has set aside the demand for service tax on liquidated damages.
The appellant/assessee is paying service tax under forward charge on various services, namely, commercial training or coaching, mandap keeper service, renting of immovable property service, technical inspection and certification agency service, maintenance or repair service, erection commissioning and installation service, consulting engineer service, etc., and on various other services as service recipients under reverse charge mechanism.
The department noted that the appellant was charging and recovering liquidated damages from the outstanding payment due to suppliers and service providers for delays in supply contracts and service contracts but had not paid service tax on them, whereupon an inquiry appears to have been initiated against the appellant.
A show cause notice was issued, proposing the demands of service tax on the liquidated damages recovered, interest, and penalty.
The issue raised was whether the demand for service tax on the liquidated damages was justified.
The tribunal set aside the demand for service tax on liquidated damages.
Counsel For Appellant: Raghav Rajeev
Counsel For Respondent: Anandalakshmi Ganeshram
Case Title: M/s. Bharat Heavy Electricals Limited Versus Commissioner of G.S.T. and Central Excise
Case No.: Service Tax Appeal No. 40333 of 2021