2026-VIL-859-CESTAT-HYD-ST
  1. Home
  2. 2026-VIL-859-CESTAT-HYD-ST

SERVICE TAX CESTAT Cases

Service Tax - Taxability of Compensation/Liquidity Damages for non-fulfillment of contractual obligations - Appellant, a testing service provider, received compensation from its client at a fixed rate per unit when the client failed to meet the guaranteed minimum number of units for testing as per the contract - Adjudicating authority treated this compensation as part of the gross amount received for the testing service and levied service tax under the Determination of Value Rules - Whether compensation or liquidity damages paid by the client due to its inability to honor its contractual commitment to send the agreed-upon number of units is liable to service tax as part of the consideration for testing services – HELD - The payment was in the nature of liquidity damage paid solely because the client could not send the agreed-upon quantity of units, and not for any service actually provided by the appellant - The adjudicating authority had treated the payment as a reimbursable expense while invoking the Rule 5(1) of Service Tax (Determination of Value) Rules, 2006, which has been held ultra vires by the High Court and upheld by the Supreme Court – The payment is more in the nature of liquidity damage and it is paid only because of the inability of the client to send the guaranteed minimum number of units for testing. Service tax cannot be levied on liquidity damages or compensation received due to non-performance by the other party - The demand for service tax on compensation charges is set aside - Taxability of Renting of Immovable Property Service - Whether the demand for service tax on renting of immovable property can be reopened for classification when the appellant has already paid the tax and received the benefit of penalty waiver – HELD – The demand is upheld as the appellant had not disputed the taxability before the adjudicating authority. Once the adjudicating authority had already extended the benefit of penalty waiver as a matter of statutory obligation and the appellant had paid the outstanding tax with interest, the classification issue cannot be reopened at the appellate stage.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GSTAT Appeal filed wrongly...
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?