Levy of GST— The subject appeal has been filed against the order passed by the Telangana State Authority for Advance Ruling.
The appellant is engaged in the construction of highway, tunnel, bridge, mass rapid transit and high speed rail projects.
The applicant has sought rulings before this Appellate Authority on the following questions:
a) Whether GST is payable on the claim of INR Rs. 2,20,00,000/-for the HGCL share of sitting fees and other expenses paid by the applicant on the directions of the Arbitrators for an amount.
b) Whether GST is payable on the claim of INR 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.
c) If the answer to questions (a) and (b) are in affirmative, then under what HSN Code and GST rate the liability is to be discharged by the Appellant, and at what time?
Against the above, the applicant, interalia contended that they had just received the Award for payment of money in the post-GST regime for the services rendered before GST. Money is neither a good nor a service.
This Authority has carefully gone through the submissions and the case law cited. 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).
Held that— The order passed by the lower authority is upheld. The subject appeal is disposed accordingly.