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

[Ganeshan Kalyani]

Agreeing to tolerate an act under HSN 999794.

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani Ji.

AI Summary

Agreeing to tolerate an act: compensation for failure to lift contractual supply is taxable as a GST service. Compensation paid by an automobile company for failure to lift a supplier's committed volume is subject to GST as consideration for a service characterised as agreeing to tolerate an act, classified by the commenters under the cited HSN service heading.