CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH, COURT NO. 3 SERVICE TAX APPEAL NO. 50399 OF 2021 [Arising out of Order-in-Original No.30/Commr./Dehradun/2020 dated 18.11.2020 passed by the Commissioner, Central Goods and Service Tax, Dehradun.]

M/s. The Power Transmission Corporation of Uttarakhand Ltd., Vidyut Bhawan, Near ISBT Crossing, ….APPELLANT Shaaranpur Road, Majra, Dehradun-248 001.

Vs.

Commissioner of Central …..RESPONDENT Goods and Service Tax, Commissionerate E-Block, Nehru Colony, Haridwar Road, Dehradun, Uttarakhand-248 001.

Appearance:

Present for the Appellant : Shri Pradeep Jain, Advocate Present for the Respondent: Shri S.K. Meena, Authorised Representative CORAM:

HON'BLE MS. BINU TAMTA, MEMBER ( JUDICIAL )

HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER ( TECHNICAL )

FINAL ORDER NO.50008/2026 Date of Hearing:12.12.2025 Date of Decision :05.01.2026 BINU TAMTA:

1. The issue involved in the present appeal is whether the amounts collected by the appellant in the nature of forfeiture of security deposits/earnest money and fines/penalties, liquidated damages against delayed completion of works is chargeable to service tax under Section 66E(e) of the Finance Act, 1994, Act, 1994

2. The appellant, a Government Company established to carry out power transmission functions in Uttarakhand. During audit, officers examined the appellant’s books for the period 01.07.2012 to 31.03.2016 and noted that several contractors such as M/s. Hythro Power, Shri Krishna Constructions and others failed to perform their contractual obligations in time. As per the contractual terms, the appellant invoked bank guarantees and forfeited earnest money/performance securities and levied penalty. These sums were never charged as price for any service but were automatic consequences of breach. Despite being initially aware of these facts, the Department initially issued the first show cause notice dated 13.06.2017 covering April 2012 to the March 2016 and raised a demand on the same reasoning. This first SCN culminated in Order-in- Original dated 14.03.2018, which in turn was appealed. The Commissioner (Appeals) allowed the Appellant's appeal vide Order-in- Appeal dated 14.11.2019. The order relied, inter alia, upon the law laid down in Vikhroli Corporate Park², which was affirmed by the Hon'ble Supreme Court, CAD No.33102/2019 dated 4.10.2019 and held decisively that liquidated damages or forfeiture of security deposits are not taxable under Section 66E(e).

3. Notwithstanding the aforesaid order of the Commissioner (Appeals), show cause notice dated 28.03.2010 was issued to the appellant for the period April, 2016- June, 2017, alleging that the amounts collected by the appellant in the form of fines/penalties, liquidated damages, forfeiture of earnest money/security deposits etc.

from the contractors who failed to provide the services within the agreed stipulated time was in lieu of ‘tolerating the act’ of service providers/contractors like poor performance or not meeting the obligations and was therefore, chargeable to service tax amounting to Rs.7,98,178,160/- as the services rendered fall under Section 66E(e) of the Act. The Adjudicating Authority vide order dated 18.11.2020 confirmed the demand of Rs.7,98,78,160/- and penalty of equivalent amount under Section 76 and penalty of Rs.10,000/- under Section 77 of the Act. Hence, the present appeal has been filed before this Tribunal.

4. Both sides agreed that the issue is no longer res integra and has been settled by the Tribunal in the following cases:- (1) South Eastern Coalfields Ltd. Vs. CCE & ST, Raipur (2) CCE & ST, Raipur Vs. South-Eastern Coalfields Ltd.

(3) Hindustan Zinc Limited Vs. Commissioner of CGST & Central Excise, Udaipur.

(4) Hindustan Zinc Limited Vs. Commissioner of CGST & Central Excise , Udaipur.

(5) Hindustan Zinc Limited Vs. Commissioner of CGST & Central Excise, Udaipur.

(6) Oil & Natural Gas Corporation Ltd. Vs.

Commissioner of Central Goods & Service Tax, Dehradun (