| Question And Answer | |
|---|---|
| Subject: | compensation -taxation |
| Category: | GST |
| Querist: | CA Subodh Vora |
| Answered by: | Advocate C.B.Thakar |
| Tags: | arbitration, compensation, GST |
| Date: | April 6, 2023 |
The dispute of extra area work was finally setteled throu arbitration award pertaning to pre GST period , now. Some compensation and interest was awarded by Arbitrator. On this GST is payable or VAT/ Service Tax/ excise is payable under old regim. ? It seems that this amount received is not covered by section 142(2)(a) as price of good or services are not revised upward . But dispute of extra area work is now settled. If VAT /service tax/ Excise is payabe, how to pay same as Return of those period cannot be filed now
On above Interst income tax is payable on 50% income as per section 57(iv) of Income tax act ?
In my opinion, no GST is attracted on above facts. The amount is received as per award by arbitrator. Therefore, it is in the nature of receipt against actionable claim. Actionable claim is neither goods nor services as per para 6 in Schedule III of the CGST Act, except excluded category. The said para is as under:
“Actionable claims, other than lottery, betting and gambling.”
Thus, no tax is contemplated on above receipt under GST Act. The amount can otherwise also not liable under GST as there is no supply of service during GST period. It is only realization of money for work already done in pre-gst period.
So far as service tax/Excise/VAT liability is concerned it will depend upon whether the original amount was held liable under any such Acts. Therefore, the issue should be examined in light of treatment given to the original receipts in Pre-GST period. It is also fact that in most of the earlier Acts the limitations for filing returns, revised returns has expired and therefore there is no possibility of attracting liability for the past periods.
Regarding income tax liability I suggest to refer the question to the Income Tax faculty.