Advance Ruling- Supply- Section 7 of the CGST Act, 2017- The applicant seeks advance ruling on the following:-

1. Whether liquidated damages collected by the APPDCL from CHETTINAD LOGISTICS PRIVATE LIMITED for non-performing of an act constitute as supply as per Section 7 of GST act.

2. What is the classification under GST for such liquidated damages collected by the service receiver from such service provider for non performing of an act.

3. What is the applicable rate of tax if the answer to the question number 1 is affirmative.

Authority for Advance Ruling, Andhra Pradesh held that:- In the light of Section 7 read with definition of consideration u/s 2(31), liquidity damages paid by defaulting party to the non-defaulting party for tolerating the act of non performance or breach of contract have to be treated as consideration for tolerating of an act or a situation under an agreement and hence such an activity constitutes supply of service and the liquidity damages are exigible to tax under CGST and SGST @9% each under the chapter head 9997-'Other Services' at serial no. 35 of Notification No.11/2017- Central/State tax rate.dated 28.06.2017.