Recovery of penalty on late delivery

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Abhijeet (Querist)
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02 May 2013 Weather recovery made from supplier due to late delivery of goods liable for service tax?
Purchase order clearly mention date of delivery and supplier surpasses the date and supplied after stipulated period.
If any amount recovered from him will attract service tax being a service provider??

CA Vikas Acharya

CA Vikas Acharya (Expert)
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02 May 2013 Not a service hence not taxable.
To be a service an activity has to be carried out for a consideration. Therefore fines and
penalties which are legal consequences of a person’s actions are not in the nature of
consideration for an activity

Abhijeet

Abhijeet (Querist)
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03 May 2013 thank you vikas but
as per section 66E declared service
it says,
Agreeing to the obligation to refrain from an act.

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