Liquidated Damages Recoverable on Account of Delay in Commissioning Qualify as Supply Under GST Law

Liquidated Damages Recoverable on Account of Delay in Commissioning Qualify as Supply Under GST Law Telangana State Authority For Advance Ruling (AAR) in the matter of M/s. Achampet Solar Private Limited has ruled out that Liquidated Damages Recoverable on Account of Delay in Commissioning Qualify as Supply Under GST Law. The Question was (i) Whether liquidated damages recoverable by the applicant from Belectric India on account of delay in commissioning, qualify as a ‘supply’ under the GST law, thereby attracting the levy of GST? (ii) If the answer to Question No. 1 is in the affirmative, what should be the time of supply when liability to pay GST is triggered? Answer: The date on which the liquidated damage is determined as per the formula prescribed in the clause 6 of the contract is the time of supply of service entry in 5(e) of Schedule II by the applicant. M/s. Achampet Solar Private Limited is engaged in production and distribution of electricity obtained from solar energy. They have engaged M/s. Belectric India (P) Ltd for construction of solar power project. The agreement has clauses for recovery of liquidated damages on (2) counts, one delay in delivering of the contract and the other regarding non-performance of the plant. The applicant is desirous of ascertaining exigibility of liquidated damages to GST on account of delay in commissioning and its time of supply. The Ruling was made by Sri B. Raghu Kiran, IRS, Additional Commissioner (Central Tax) and Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) To Read Judgement Download PDF Given Below: