Fines on select deals get service tax relief

A recent ruling of the principal bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, stating that service tax is not applicable on penalty arising out of a commercial contract in certain cases of “declared service” could affect tax claims of a similar nature under GST.

The service tax department in April 2017 in a show cause notice to Coal India subsidiary — South Eastern Coalfields — stated that the company had evaded the payment of service tax worth Rs 35.26 crore on Rs 266 crore collected as earnest money deposit forfeitures, penalty and liquidated damages from the buyers of coal, contractors and material suppliers during the period July 2012 till March 2016.