Discuss whether following payments constitute a consideration for
provision of services:
(1) Interest, late fees and any penalty for late payment
(2) Advance forfeited for cancellation of an agreement by recipient to provide services.
(3) Security deposit forfeited for consideration in the course of receiving a service.
(4) Demurrages payable for use of services beyond the period initially agreed upon: e.g retention of container beyond the normal period.
(1) Section 15 provides that interest, late fees and any penalty for late payment will form part of consideration and GST will be payable.
(2) Schedule II, point 5(e) specifies that agreeing to the obligation to refrain from an Act, or to tolerate an act or a situation, or to do an act; deemed as supply of services. Thus situation of cancellation of agreement deemed as service under GST and advance forfeited forms part of consideration.
(3) The proviso to Section 2(31) of CGST Act provides that a deposit, whether refundable or not, given in respect of the supply of goods and/or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration of the supply. Thus security deposit forfeited constitute as a part of consideration.
(4) Yes , demurrages for use of service beyond the period initially agreed upon constitute consideration for provision of services.