Section 101 of the Central Goods and Services Tax Act, 2017—Levy of GST—The advance ruling authority, vide order No. GST-ARA-15/2017/B-30 dated 08.05.2018, held that the GST will be levied on the liquidated damages, treating it as independent supply and rejected the contentions of the appellant.
G. Being aggrieved by the said order, the appellant is filing the present appeal.
GROUNDS OF THE APPEAL
1. Damages are paid for compensating the loss and not for any supply:
Held that :- We confirm the observations of the AAR that as the Agreement expressly provides that liability of payment of these liquidated damages by the Contractor will be established once the delay in successful completion of trial operation is established on the part of the Contractor the said would define the time of supply.
c) If some part of delay has occurred before GST roll-out and some part of delay has occurred after GST roll-out, whether GST will be applicable to the Liquidated Damages imposed for entire period of delay or to the period falling after GST roll-out? In case when GST is to be imposed for period after date of GST rollout but due to maximum capping of LD, the amount of LD is calculated at given percentage instead of being period-based, then how GST needs to be levied.
The AAR held that since no precise facts were before them, the section 14 of the GST Act would have to be referred to by the appellant. We agree with the same.
d) Whether the contractor / vendor will be able to utilize the amount of LD imposed over him as Input Tax Credit subject to satisfying all other conditions?
We agree with the AAR that the answer to the above is that input tax credit would be admissible subject to the conditions and restrictions as specified in the GST Act and the Rules made thereunder. [2018] 4 TAXLOK.COM 78 (AAAR-Maharashtra)