Contractual consideration for refraining, tolerating or doing an act is taxable only if an independent contractual supply exists. GST applies to payments only when there is an express or implied contract under which one party agrees to refrain from, tolerate, or do an act in exchange for consideration; amounts that are merely compensatory or punitive consequences of breach, statutory compensation, forfeiture, or fines are not consideration for such a supply and are not taxable, while contractual ancillary charges (cancellation fees, late payment surcharges, pre payment or early termination charges) that form part of the commercial terms are taxable as supplies and assessed with the principal supply.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Contractual consideration for refraining, tolerating or doing an act is taxable only if an independent contractual supply exists.
GST applies to payments only when there is an express or implied contract under which one party agrees to refrain from, tolerate, or do an act in exchange for consideration; amounts that are merely compensatory or punitive consequences of breach, statutory compensation, forfeiture, or fines are not consideration for such a supply and are not taxable, while contractual ancillary charges (cancellation fees, late payment surcharges, pre payment or early termination charges) that form part of the commercial terms are taxable as supplies and assessed with the principal supply.
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