Home Case Index All Cases GST GST + AAR GST - 2019 (1) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 1668 - AAR - GSTTime of supply - Some or part of the events occurred before implementation of GST laws - Levy of “Liquidated Damages” and other penalties like milestone penalties levied on suppliers/ contractors in the nature of making good the damages for any delays in supply of service or goods in the following cases - When some part of the delay in supply has occurred before the implementation of the GST and some part of delay in supply has occurred after GST came into force, whether GST will be applicable to the Liquidated damages imposed for entire period of delay or it would be applicable only to the period falling after introduction of GST? HELD THAT:- In the normal course of business of steel manufacture and sale/ distribution of its products, RINL enters in to various contracts with vendors for providing materials and services for operational activities. In this case, if there is any delay on the part of the supplier/contractor to provide materials/ services, Liquidated damages (LD) are deducted from the amount payable to such vendor. The LD so deducted is treated as other miscellaneous income. In respect of contracts relating to Construction of new plant in expansion project or renovation of old plant, normally the contract is awarded to vendors to build the sub plant or a part of it on Turnkey basis - If there is any delay in completing the contract, the factual position would be ascertained, particularly to know the fact whether the contractor/vendor is responsible for the delay or not. If the delay is on account of the contractor, then Liquidated Damages would be calculated as per the contractual terms and same will be charged from the contractor. Time of supply - HELD THAT:- The liquidated damages are determined and imposed upon the contractor after in-depth study. In terms of the agreement, the clauses revealed that the levy of liquidated damages is not when the delay is occurring but the liability of payment of these liquidated damages by the Contractor will be established once the delay in successful execution of work is established on the part of the Contractor. This would define the time of supply. Liquidated damages if any collected/received under previously applicable Service Tax regime before coming into effect of GST, would be dealt with in accordance with the then existent provisions under applicable laws.
|