GST on Penalty on foreign bills, Goods and Services Tax - GST

[Deepak Birla .]

Company B is importing various goods . In purchase order there is the clause of penalty deduction for late delivery of goods. When goods are delivered late, penalty is deducted from vendor bill which is in foreign currency. Question is whether GST is applicable on deduction of penalty based on tolerating of an act of the foreign vendor which falls under the definition of service under GST law.

Here Company B as provider of service is located in India, recipient of service is located outside India . So if we go by Section 13(2) , place of supply of service is outside India. But whether reduction in liability of by company B after adjusting penalty amount from the bill of vendor will amount to consideration receipt in FC to qualify export of service .

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Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

In my view yes.

[BRIJMOHAN GOYAL]

But sir,what will be the taxable value of Import transaction. Is it (Import value - Penalty charges) or is it Full Import Value.