Recently, Circular No. 178/10/2022-GST dated August 3, 2022, provided clarification on applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract. Despite there being plethora of jurisprudence surrounding that no GST shall be levied on cancellation charges, Circular has treated the same as supply and stated that GST shall be paid on the same.

In this article, our Partner, Mr. Deepak Suneja and Senior Associate, Mr. Ayush Agarwal analyse jurisprudence surrounding divisibility of the contract and analyse whether GST can be made applicable on cancellation charges or not.

Please click on the below link to read our article titled ‘GST on Cancellation charges – Conundrum Continues’.

NITYA I Article 99 I GST On Cancellation Charges – Unsettling The Settled