GST on Liquidated Damages

[sunilkumar bhageria]

LD applied on supply bills raised and supply made before GST implementation but payment made by the customer after GST implementation and applied GST on such LD . Wether GST applicable on such LD where supply made in pre GST era. Though the LD was applicable as per contract term only thing is wether GST also applicalbe on the same when the supply made before GST era.

Further in some cases where supply made after GST implementation and GST charged on supply bill. Customer deducted LD on full invoice value including GST and again applied GST on such LD hence cascading effect i.e GST on GST. Customer not entitled to take GST input.

AI Summary

GST on liquidated damages: time of supply and taxable value determined by statutory rules, not contract terms.
Time of supply for liquidated damages is the invoice date if invoice and supply predate GST implementation but payment follows; where supply and payment occur after GST implementation, time of supply is date of receipt of payment. GST cannot be included in taxable value by contract; the value of damages is the actual amount received and input tax credit eligibility must follow statutory conditions.