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2022 (11) TMI 550 - AAAR - GSTLevy of GST - share of sitting fees and other expenses paid by the applicant on the directions of the Arbitrators for an amount - reverse charge mechanism - liquidated damages - compensation of additional cost incurred due to delay in issue of drawings and failure of HGCL to handover site on time and refusal to issue the taking over certificate - HSN Code and GST rate - time limitation. Whether GST payable on the claim of Rs. 2,20,00,000/- for the HGCL share of sitting fee and other expenses paid by the applicant on the directions of the Arbitrators for an amount? - HELD THAT:- It is observed by this Authority that the Government, vide Sl.No.3 of Notification No.13/2017. dt. 28.6.2017 has levied tax in respect of services provided by the Arbitrary Tribunals to be paid by any business entity located in the taxable territory, under reverse charge mechanism. The relevant tariff also provides SAC code of 998215 for such services @ 9% each under CGST and SGST - the argument of the applicant that their activity do not attract GST has no legal backing. Whether GST is payable on the claim of INR of Rs. 1,15,80,62,000/- (including interest amount) on account of compensation of additional cost incurred due to delay in issue of drawings and failure of HGCL to handover site on time and refusal to issue the taking over certificate? - HELD THAT:- As per the claim documents submitted before the lower authority, not disputed by the applicant, the amount was towards compensation for delay in execution of the works and prolongation costs. When a subjective meaning is deciphered from the phase used by the applicant themselves, the amounts were recovered as compensation for delay in execution of the works. That is to say that the applicant had received the amount to agreeing to the obligation to refrain from an act, or tolerating an act or a situation that arose due to delay in execution or protraction or elongation of work. This is nothing but compensation for refraining to do an act or tolerating to do an act. The consideration received for such act is taxable @ 9% each under CGST and SGST and falls under Ch Head 9997 at Sl.No. 35 of Notfn No. 11/2017-CT (rate). Appeal disposed off.
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