GST Aftermath of Liquidated Damages

Parties entering into contractual arrangements usually insist on including a clause for liquidated damages to pre-emptively agree upon the amount of reparation that would be payable by either Party on failure to meet its commitment. Generally, such commitments are in the nature of adhering to timelines, fulfillment of conditions, quality of products, etc. The levy of an indirect tax on the amount of liquidated damages, has faced a series of challenges under the erstwhile service…