Non-lifting of agreed quantity

[S.C. WADHWA]

Dear Expert,

The buyer has agreed to pay selling price minus cost of secondary packing ect exp which mutually agreed for not lifting the agreed quantity and the material will be destroyed in the supervision of buyer.

Now my query is in which account the said receipts to be booked as liquidated damages or penalty or in any other account. Whether this amount attracts service tax or not. Please give your reply immediately along with name of service/section in which this fall.

Regards,

WADHWA

AI Summary

Clarification Sought on Accounting for Reduced Price Receipts: Liquidated Damages or Penalties? Service Tax Implications Discussed. A user in a discussion forum sought advice on accounting for receipts from a buyer who agreed to pay a reduced price for not lifting the agreed quantity of goods, which will be destroyed under the buyer's supervision. The user inquired whether these receipts should be recorded as liquidated damages or penalties and if they attract service tax. Responses indicated that service tax applies to liquidated damages and suggested seeking permission for duty remission if goods are unfit for consumption. Additionally, there was a query about invoicing with specific tax rates to potentially save on taxes.