TaxTMI 
TaxTMI 
GST Implication on Payment under ICC Arbitration Award for Breach of Non-Solicitation Clause
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....ST Implication on Payment under ICC Arbitration Award for Breach of Non-Solicitation Clause<br> Query (Issue) Started By: - Abhijeet Mane Dated:- 14-1-2026 Last Reply Date:- 19-1-2026 Goods and Services Tax - GST<br>Got 4 Replies<br>GST<br>A is required to pay C (Located outside India) under an ICC arbitration award for breach of a non-solicitation/non-circumvention clause in their Term Sheet. The....
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.... breach occurred because A directly engaged with B (Customer of C) and secured brand rights for India during the exclusivity period, triggering liquidated damages of INR 1 Lacs to be paid by A to C. Does GST under Reverse Charge apply on this payment to C? Reply By Sadanand Bulbule: The Reply: Payment of liquidated damages to a non-resident pursuant to an arbitral award for breach of cont....
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....ract is compensatory in nature and not consideration for any supply; hence, it is outside the scope of GST and no reverse charge applies. Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Kindly also refer Circular 178 of 2022 for clarification. Reply By Shilpi Jain: The Reply: There is no supply and thereby no GST Reply By VIPUL JHAVERI: The Reply: IMHO, Mute Point remains ICC award....
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.... is Liquidated Damge or Not, normally if damages are predefined in contracts it takes form of liquidated Damages mostly, While here may be this award by ICC is like unliquidated damage and if paying RCM gets us ITC back, better to opt for safer, no loss option unless this compenseation paid is sure as "Liquidated Damges" then of course it escapes RCM<br> Discussion Forum - Knowledge Sharing ....