GST not Payable on liquidated damages for breach of exploration obligations

In re GSPC (JPDA) Ltd. (AAAR Gujarat) Gujarat Appellate Authority for Advance Ruling (AAAR) reviewed the taxability of a settlement payment made by GSPC (JPDA) Ltd. to the National Petroleum and Minerals Authority (ANP). The case involved the termination of a Production Sharing Contract (PSC) for petroleum exploration in the Joint Petroleum Development Area (JPDA) shared by Timor-Leste and Australia. The Gujarat Authority for Advance Ruling (GAAR) had ruled that the settlement payment of USD 80 million, representing GSPC’s share, was subject to GST under the reverse charge mechanism. Thi...