#Declared Service

CESTAT Hyderabad rules that penalty charges levied for delayed payment of DEMAT account maintenance fees constitute a 'declared service' under Section 66E(e), making them taxable even if structured as penalties. This clarifies that financial intermediaries cannot evade service tax by reclassifying contractual default fees as non-taxable interest-like amounts, impacting all stock brokers and depository participants.

The CESTAT holds that compensation for underutilized manufacturing capacity is not consideration for a declared service under Section 66E(e) of the Finance Act, 1994, as no independent obligation to tolerate or refrain exists.