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2023 (11) TMI 870 - AAR - GSTLevy of GST - supply involved in terms of section 7 of the CGST Act, 2017 or not - amount deposited by the applicant (75%) in escrow account against bank guarantee pending outcome of the further challenge against Arbitral Award or dissatisfaction against DAB decision - time of supply'when tax on such DAB/arbitral award is payable to Government exchequer - eligibility to claim Input Tax Credit (ITC) - scope of 'consideration' as defined under section 2(31) of the CGST Act, 2017 - HELD THAT:- Consideration in relation to supply/goods, as defined in the Act, includes payment made or to be made, in money or otherwise, in respect of/response to, for and the inducement of the supply, whether by the recipient or by any other person. It shall not include any subsidy given by the Central/State Government. Consideration further also includes monetary value of any act/forbearance, whether by the recipient or by any other person. What is significant is however, the proviso to the definition which states that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply. Though the amount ie 75% paid into an escrow account is towards the dispute pertaining to the supply, what brings this particular transaction out of the scope of the consideration is the fact is that it is not paid to the contractor [supplier] but is deposited in an escrow account; that it cannot be withdrawn from the account without the explicit approval of the applicant; that the amount can be withdrawn only subject to the condition that the supplier) [contractor] provides a BG for the said amount - the applicant, though he has deposited the amount in an escrow account, also does not term this as a consideration for the supply since he is agitating his ease, feeling aggrieved by the decision rendered against him. In view of the foregoing, it is held to be outside the scope of 'consideration' as defined under section 2(31) of the CGST Act, 2017. Supply or not - HELD THAT:- The moment the Supplier [contractor] finally succeeds in the dispute/the applicant accepts the adverse decision, this ruling would be rendered infructuous. This finding is in operation only for a limited period when the supplier [contractor] has not succeeded in the litigation/the applicant has not accepted an adverse decision & the supplier uses the amount lying in the escrow account subject to his furnishing a BG. It also goes without saying that the department reserves every right to recover any interest due on such amount for the delay in payment of GST, if any, on account of the non acceptance of adverse decision of the DAB/Tribunal. The amount deposited by the applicant (75%) in escrow account against bank guarantee pending outcome of the further challenge against Arbitral Award or dissatisfaction against DAB decision, is not liable to GST under the provisions of CGST Act, 2017.
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