GST Applicability on Liquidated Damages / Penalty deduction from contractor’s bills

By | June 7, 2018

Question : Whether deduction of Liquidity Damage (LD)/Penalty deduction from contractor’s bills and charging Penalty for non-lifting of coal till targeted minimum level to Annual Contractual Quantity (ACQ) will attract GST?

Answer: Yes, it is a service being “tolerating an act” as per Schedule II of the CGST Act,2017 thus GST shall apply.

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