GST on liquidated damages to be awarded by ICC

In re M/s. North American Coal Corporation India Private limited (GST AAR Maharashtra)

1. Whether liquidated damages that may be awarded to the Applicant by the International Chamber of Commerce (“ICC”) qualifies as a ‘supply’ under the Goods and Services Tax (“GST”) law, thereby attracting the levy of GST ?

Answer – The consideration that may be awarded to the applicant by the ICC would qualify as supply of service as per Section 5(e) of Schedule II of Section 7(1) of the CGST Act as per detailed discussions above in this regard.

2. If the answer to Question No. 1 is in the affirmative, what should be the time of supply, that is to say, the point of time in which NACC’s liability to pay GST arises ?

Answer–  The provisions of Section 13 of the CGST ACT will determine the time of supply in cases of supply of services. In the subject case the liability of tax would arise on the applicant as per Sr.No.5(e) of Schedule II of Section 7(1) of the CGST Act and the time of supply would be determined as per the provisions of Section 13 of the CGST Act after the award of arbitration proceedings is given by the Arbitration Tribunal as administered by the ICC as per the Association Agreement by the parties to dispute, in the present proceedings.

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