GST DAILY – 293

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18% GST is applicable on the amount recovered from suppliers for not performing contracts within the stipulated period: AAR

THE ANDHRA PRADESH AUTHORITY FOR ADVANCE RULING UNDER GST IN THE CASE OF TRANSMISSION CORPORATION OF ANDHRA PRADESH LTD., IN RE AAR No. 07/AP/GST/2024, decided on 9-5-2024

👉 The AAR Judgement:-

✔️ Penalties or liquidated damages deducted by assessee from amount due to its supplier for compensating loss borne by assessee on account of supplier not adhering to time limits for supplies to be affected as agreed upon by contracting parties as per agreement are liable to GST at rate 18 percent under Heading no. 9997 as liquidated Damages are to be treated as consideration for an act of tolerance of non-performance.

Section 9 read with section 7 of Central Goods and Services Tax Act, 2017

Section 73 read with section 74 of The Indian Contract Act, 1872.