The Authority for Advance Rulings (AAR) has ruled that payments in respect to nonperformance of a contract would be liable to goods and services tax (GST). This has made multinational companies, especially those executing infrastructure projects, and the mining sector jittery, and it could have implications on mergers and acquisitions, franchise arrangements too. The Contract Act envisages these damaged under a contract as genuine pre-estimate so as to avoid hassles of computation of damages and possible contractual disputes, or litigations, in case of non-performance.

(Economic Times)