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Liquidated damages levied for delay in execution of contract within time are liable to 18% GST

December 2, 2019[2019] 112 5 (AAR - ANDHRA PRADESH)

GST: Where applicant, engaged in business of steel manufacture and sale of its products, entered into two contracts with vendors, namely, Supply and maintenance contract for providing materials and services for operational activities and, secondly, project construction contract for building sub plant or a part of it on turnkey basis, liquidated damages and other penalties like milestone penalties levied on suppliers/ contractors in nature of making good damages for any delays in supply of service or goods under both contracts would be chargeable to GST and said levy of liquidated damages would be covered under schedule entry no. 35 of Notification no. 11/2017- Central/State Tax (Rate) as amended from time to time

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