Consideration for supply: only payments under an agreement to do or tolerate an act attract GST, not mere compensatory penalties. GST attaches only where payments constitute consideration for a supply under an express or implied contract to do, refrain from, or tolerate an act; liquidated damages, statutory compensation, penalties for law violations, cheque dishonour fines and forfeitures that merely compensate for breach or deter conduct are not consideration and not taxable, whereas commercially bargained ancillary charges (late payment acceptance fees, cancellation charges, early termination or pre payment facilities) constitute consideration for a supply and are taxable at the rate applicable to 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.
Consideration for supply: only payments under an agreement to do or tolerate an act attract GST, not mere compensatory penalties.
GST attaches only where payments constitute consideration for a supply under an express or implied contract to do, refrain from, or tolerate an act; liquidated damages, statutory compensation, penalties for law violations, cheque dishonour fines and forfeitures that merely compensate for breach or deter conduct are not consideration and not taxable, whereas commercially bargained ancillary charges (late payment acceptance fees, cancellation charges, early termination or pre payment facilities) constitute consideration for a supply and are taxable at the rate applicable to the principal supply.
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