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GST is applicable on Liquidated damages deducted from the payments to be made to required suppliers in case of delayed delivery of goods or services.

Shanti Prime Publication Pvt. Ltd.

Levy of GST — 1) Being a part of the Ministry of Defence, Government of India, whether they are liable to pay GST Advance on the following supply of services:

a) Liquidated damages deducted from the payments to be made to required suppliers in case of delayed delivery of goods or services.

b) Amount of Security deposit forfeited of suppliers due to non fulfilment of certain contract conditions.

c) Security deposit left unclaimed by the suppliers and recognised as income after 3 years.

d) Food and beverages supplied at industrial canteen inside the factory premises.

e) Community hall (Multipurpose Hall) provided on rental basis to employees of our organisation.

f) School bus facility provided to children of the employees.

g) Conducting exams for various vacancies.

h) Rent recovered from residential quarters of employees.

Answer :- (a) Answered in the affirmative.

(b) Answered in the affirmative.

(c) Answered in the negative.

(d) Answered in the affirmative.

(e) Answered in the affirmative.

(f) Answered in the affirmative.

(g) Answered in the negative.

Question :- 2) Whether Input Tax Credit on expenditure on the goods and services consumed by our organisation in following activities shall be available:

a) Maintenance of garden inside the factory premises.

b) Maintenance and upkeep activities relating to gardens, parks, playground, factory school for children of employees, hall for recreational activities, residential quarter buildings of employees, roads, footpaths, street lightings and other parts of estate area that are located outside the factory premises but within the factory estate,

c) Medicines purchased by the hospital maintained by our organisation and used for treatment of factory employees and their dependents. Expenditure on maintenance, upkeep and other activities relating to such hospital.

d) Expenditure related to maintenance and upkeep of guest houses maintained by organisation.

e) Expenditure related to purchase of LPG cylinders used within industrial canteen.

Answer :- (a) Answered in the negative.

(b) Answered in the negative.

(c) Answered in the negative.

(d) Answered in the negative.

(e) Answered in the affirmative.

Question:- 3) Whether the exemption to a ‘defence formation’ for preparation and generation of E-way bills is applicable to Ordnance factories & other Central Government & Public Sector Undertakings(PSU’s) that function under the Ministry of Defence, Government of India?

Answer:- Answered in the affirmative.

Question:- 4) Whether exemption on payment of GST on transport of ‘military or defence equipments through a goods transport agency applicable to goods transported by our organisation?

Answer :- Answered in the affirmative.

Question :- 5) Whether Input Tax Credit is to be reversed on finished goods that are destroyed during testing?

Answer :- Answered in the negative in view of discussions made above.

Question :- 6) Whether proportionate Input Tax Credit has to be reversed in cases where lesser payment is made to the supplier due to deduction on account of liquidated damages from supplier’s dues?

Answer :- Answered in the affirmative.

Question:- 7) Being a part of the Ministry of Defence, Government of India, whether the following notifications are applicable to our organisation and what shall be the impact of such notifications:

a) Notification No.2/2018-Central Tax (Rate), in relation to services by an arbitrator or an advocate to our organisation.

b) Notification No.3/2018-Central Tax (Rate), in relation to services supplied by our organisation by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017,

c) Notification No.36/2017-Central Tax (Rate), in relation to payment of tax on reverse charge mechanism on sale of used vehicles, seized and confiscated goods, old and used goods, waste and scrap to a GST registered person.

Answer :- (a) The applicant is not eligible for exemption as per the said Notification,

(b) Renting of immovable property for non-residential purpose is taxable at the hands of the applicant.

(c) The applicant is required to discharge GST on such sale.

Question :- 8) Whether Input Tax Credit on services of passenger vehicles hired by our organisation is available?

Answer:- Not Answered, being withdrawn by the applicant.— General Manager Ordnance Factory Bhandara, In Re… [2018] 07 TAXLOK.COM 110 (AAR-Maharashtra)