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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
Held - After hearing both sides, I find that this Bench of the Tribunal in the case of M/s. Neyveli Lignite Corporation Ltd. (supra) has followed the earlier decision of the co-ordinate Delhi Bench in the case of M/s. South Eastern Coalfields Ltd., wherein it was observed as under:-
" The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither the appellant is carrying on any.....
Issue Favourable to Tax Payer ?:- yes
Held - Learned counsel for the appellant is justified in submitting that the issue stands covered by the Division Bench judgement of the Tribunal in M/s South Eastern Coal Fields Ltd. The Division Bench observed as follows:
The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any inte.....
Issue Favourable to Tax Payer ?:- no
Held - In the present case, Liquidated damages are claimed by the applicant from the contractor due to the delay in performance of the contract, beyond the date prescribed in such contract by the contractor. Similarly, penalties are fixed for breach of the provisions of the contract. These amounts are consideration for tolerating an act or a situation arising out of the contractual obligation.
Further Section 2(31)(b) of the C.....
Issue Favourable to Tax Payer ?:- yes
Held - The Appellant had no choice of tolerating cancellation or not. The Appellant has not chosen to tolerate the cancellation. The cancellation was in pursuance of the order of the Hon’ble Supreme Court and not as a result of a contract to tolerate cancellation. There was no consideration for tolerating the cancellation, only a compensation provided for statutorily for the investment made in the mines by the Appellant.
Even in .....
Issue Favourable to Tax Payer ?:- yes
Held - There is substance in the submission advanced by the learned counsel for the Appellant that no service tax is payable on the amount collected towards delay in delivery as this issue has been decided by the Tribunal in favour of the Appellant in South Eastern Coalfields. Various commercial contacts had been executed by South Eastern Coalfields and certain clause provided for levy of penalty for nonobservance / breach of the terms of the .....
Issue Favourable to Tax Payer ?:- yes
Held - In the instant case, the said amount has not been collected towards any activity liable for Service Tax but as compensation/penalty for breach of terms and conditions of the contract [Agreement dated 12.07.2011] i.e. non-compliance of MGT. Thus, such compensation charges are not covered within the definition of taxable service under the Finance Act, 1994 and hence not liable for Service Tax.
The recovery of liquidated damages/pe.....
- 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 ?
