Liquidated Damages for Non-Performance Classified as Service Supply u/s 7, Subject to 18% GST.

Supply or not - liquidated damages collected for non-performing of an act - In the light of section 7 read with definition of consideration u/s 2(31), liquidity damages paid by defaulting party to the non-defaulting party for tolerating the act of non performance or breach of contract have to be treated as consideration for tolerating of an act or a situation under an agreement and hence such an activity constitutes supply of service - rate of GST is 18% - AAR .....

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