“A” supplies Raw material to “B”. It so happens that ouput of “B” by using “A”s supply turns out to bad / nonsaleable. To maintain good relationship and keeping commercial expediency in view, “A” agrees to pay compensation to “B” calculated at sale value of defective output. It is proven that “B” output has become non-saleable because of raw material supplied by “A”.
Question :-
Whether “B” is liable to pay GST on Compensation amount received from “A”
Compensation for Defective Goods: 'B' Liable to Pay GST on Amount Received from Supplier 'A' Under Discussion A supplier, 'A,' provided raw materials to 'B,' resulting in defective, non-saleable output. To maintain a good business relationship, 'A' agreed to compensate 'B' for the loss, calculated at the sale value of the defective output. The query raised was whether 'B' is liable to pay GST on the compensation received. Responses indicated that 'B' is indeed liable to pay GST on the compensation amount received from 'A,' as confirmed by multiple contributors in the discussion. (AI Summary)
TaxTMI 
TaxTMI 
