GST / Service Tax applicability on liquidated damages, late fee, compensation etc.

Virtual Webinar

10 August 2022 | 05:00 PM - 06:00 PM

The declared service of ‘agreeing to the obligation to refrain from an act or to tolerate an act or situation, or to do an act’ was first introduced in the service tax regime and the same has been specifically declared as a service under the GST regime as well. The scope and applicability of this entry on liquidated damages, compensation, late fee, penalty etc., has been a subject matter of debate and dispute since the beginning. Recently, vide a Circular dated 3 August 2022, CBIC has sought to clarify the scope and applicability of the said entry on various activities.

Lakshmikumaran & Sridharan Attorneys is organizing a webinar on 10 August 2022 (Wednesday) between 5 PM and 6 PM, for an in-depth understanding of the clarifications made vide the Circular.  The webinar would cover:  

  • Scope of the entry i.e., agreeing to the obligation to-
    - Refrain from an act
    - Tolerate an act or situation
    -  Do an act
  • Clarifications on applicability of GST/service tax on
    - Liquidated damages for breach of contract
    - Cheque dishonour fine/penalty
    - Amount recovered from an employee leaving the employment before the agreed time
    - Late payment charges
    - Cancellation charges
  • Whether the supply will be incidental to main supply?
  • Way forward
    - Analysis of existing contracts
    - Impact on pending service tax/GST litigations
    - Option to take refund if tax already paid


  • Mr. V. Sridharan, Senior Advocate, Bombay High Court and Co-founder, L&S
  • Ms. Charanya Lakshmikumaran, Partner, L&S