GST on delay delivery or delay completon of contract

[Sanjoy Das]

We have taken some goods and services from vendor did not completed the contract within the time period whether supply of goods and service. we have deducted the proportionate amount for delay supply or delay completion of service . The vendor has charged GST on thier bill. and we have taken full ITC on thier bills.

Kindly advise whether GST has to charged or reversed when debit note issue to vendor for above reason and effectlvely we have to reverse the ITC proportionately.

AI Summary

GST on liquidated damages: deductions for delayed performance treated as taxable consideration; ITC reversal may be required.
Deductions for delayed supply or delayed completion may be treated as taxable consideration under Schedule II and subject to GST according to several advance rulings; alternative tribunal authority disputes that characterisation. For input tax credit, a supplier's credit note will adjust tax liabilities and the recipient's ITC, whereas absent a credit note recipients are advised to proportionately reverse ITC for the undelivered or deficient portion and consider interest, reflecting divergent views on classification and compliance steps.