AAR : ‘Liquidated damages’ awarded pursuant to arbitration constitutes ‘supply’, taxable at actual amount

Oct 23,2018

Maharashtra AAR holds that liquidated damages awarded to the applicant by the International Chamber of Commerce (“ICC”) pursuant to arbitration would qualify as ‘supply’ as per Sr. No. 5(e) of Schedule II of the CGST Act which reads “agreeing to the obligation to refrain from an act or to tolerate an act or a situation or to do an act”; Notes that, in the present case, there was a clear understanding/ agreement between the parties to foresee and tolerate an a...

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