GST treatment and rate

[Madhavan iyengar]

a automobile component manufacturer has a committed volume of 10000 parts supply to a automobile company and if this voulme is not lifted by the auto company compensation is payable since the volume has not been committed by the automobile company and they agree to compensate the auto component supplier for a particular amount

issue: gst would be applicable on this compensation given by automobile company to auto component manufacturer but under which category of service will this fall

AI Summary

GST Applicable on Compensation for Unpurchased Auto Parts, Classified Under 'Agreeing to Tolerate an Act' HSN 999794. An automobile component manufacturer has an agreement to supply 10,000 parts to an automobile company. If the company does not purchase the committed volume, it compensates the supplier. The issue raised is the applicability of GST on this compensation and the appropriate service category. It was clarified that the compensation falls under the category of 'agreeing to tolerate an act' as per HSN 999794. Both responses in the discussion agree on this classification.