Is penalty for a work is liable for Service Tax?

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Ganesh B (Querist)

31 January 2009 Can anybody answer the following?

Our company sales our commodities by taking to customer place by company's own/registered vehicles after place the order of a customer. After supply the items, the customer didn't take immediately the items and delaying the vehicles. For delaying the vehicle for a stipulated time, we;re charging penalty after that time per day basis. In the billing we're showing the commodity value and this penalty value and paying VAT for both.

Is this penalty for delaying is liable for Service Tax? Please study and give answers

Dayal

Dayal (Expert)

31 January 2009 If the penalty clause is explict in the agreement then it is not subject to service tax as it is not forming a part of the service component, But this is not in written terms, then yes it will be subject to service tax.

Only service charges are subject to service tax and not any other charges if there is a written arrangement

Ganesh B

Ganesh B (Querist)

31 January 2009 Thanks for your reply Mr. Dayal

Here the penalty is agreed by the customer
and paying as per Tax Invoice, in which we collecting VAT and paying to concern department.

Ganesh B

Ganesh B (Querist)

18 May 2010 Further answers