The bench noted that penal clauses in contracts are designed to deter default and ensure adherence to terms, and not to generate revenue through taxability.
In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, set aside a service tax demand raised against Oil & Natural Gas Corporation Ltd. (ONGC), holding that amounts collected as liquidated damages and other related penalties do not attract service tax under Section 66E(e) of the Finance Act,…
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