AAR: GST leviable on the compensation paid to lessor for vacating its claim

Last updated: 27 January 2020
Quick Summary
The Goa Authority for Advance Ruling (AAR) has determined that GST is applicable on compensation paid by an entity to a lessor for vacating their claim. The AAR classified this compensation as a 'supply of service' under the CGST Act. This ruling addresses a situation where land was allotted for an SEZ, but the project failed, leading to a Supreme Court order for compensation to the parties involved.

Court :
The Hon'ble AAR

Brief :
The Hon'ble AAR, Goa in the matter of M/s Goa Industrial Development Corporation [AAR No. GOA/GAAR/01 of 2019-20/1875 dated October 17, 2019] has held that the compensation paid by the Applicant on lessor's deposit would clearly qualify as 'supply of service' under clause 5 of Schedule II of the CGST Act, 2017 ('CGST Act') and therefore liable to GST.

Citation :
M/s Goa Industrial Development Corporation [AAR No. GOA/GAAR/01 of 2019-20/1875 dated October 17, 2019]

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Bimal Jain
Published in GST
Views : 694
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