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- Whether GST is payable on cancellation charges/ penalty/ liquidated damages ?
Whether GST is payable on cancellation charges/ penalty/ liquidated damages ?
Issue Favourable to Tax Payer ?:- yes
We find that CBIC has issued Circular Number breach of the 178/10-2022-GST, dated 3-8-2022, clarifying the GST applicability on liquidated damages, compensation and penalty arising out of breach of contract.
We find that CBIC vide Circular No. 245/02/2025-GST dtd. 28.01.2025 has also clarified on th.....
Issue Favourable to Tax Payer ?:- yes
Held - We are of the view that the amount of MGU charges which is paid as 'liquidated damages' is an amount paid only to compensate for injury, loss or damage suffered by the applicant due to breach of contract and shall not construed as the activity of refraining from or tolerating an act or to do anything. In this case, MGO Charges are merely a flow of money from GAIL who causes breach of the contract .....
Issue Favourable to Tax Payer ?:- yes
Held - The primary question posed before the Authority is whether the GST is payable on the 'interest awarded under Arbitration' and 'costs awarded under Arbitration received by the applicant. The facts are already mentioned in paragraph above & hence is not being repeated.
As far as the award o.....
Issue Favourable to Tax Payer ?:- yes
Held - In case of MSETCL, if a contractor fails to complete all the works within the period stipulated as per the Terms & Conditions of the Contract., then, MSETCL recovers Liquidated Damages/Penalty for breach of contract. MSETCL is interested in getting services within stipulated time. The contract is for performance of work and not for br.....
Issue Favourable to Tax Payer ?:- yes
Held - As is evident in this case liquidated damages are paid only to compensate for loss due to breach of PSC in terms of clause 4.5(a)(iii). We have not been in a position to pinpoint any agreement, express or implied between ANP and the six concessionaire that on receiving the liquidated damages, ANP will refrain from or tolerate an act or do an act for the concessionaires (including the appellant] paying the li.....
Issue Favourable to Tax Payer ?:- no
Held - In the present case, compensation amounts are claimed by the applicant from the customers for non-performing of contractual obligations or breach of the contract.The moot point here is whether the above said activity is supply or not or in words whether the said collection in the form of liquidity damages is consideration or not. It is&nb.....
- Whether reimbursement of expenses is leviable to GST?
- Whether input tax credit is admissible if invoice/debit note does not appear in Form GSTR-2A/2B or tax is not paid by supplier ?
- Whether marketing and sales promotion services to customers located outside India is intermediary or export of services ?
- Whether order / show cause notice is valid if passed without pre-show cause notice consultation or GST DRC-01 (summary SCN) or GST DRC-01A (tax intimation notice) ?
- Whether recovery proceedings can be initiated if assessee is willing to file an appeal ?
- Whether input tax credit can be transferred to the transferee entity in case of an inter-state business transfer ?
- Whether interest is payable for the period during which the reply to the deficiency memo remains pending ?
- Whether combined show cause notice can be issued covering multiple financial years ?
- Whether tax can be recovered by Department without prior intimation in Form DRC-01D ?
- Whether a penalty equal to 200% of the tax amount can be demanded in case of detention or seizure of goods ?
