Why cancellation charges are taxable? India CBIC vs EU ECJ

Recently while clarifying that flight or hotel bookings if cancelled by a consumer, the charges retained therein by the service providers shall be subject to GST, the circular cited the following reasons;

– Cancellation fee can be considered as the charges for the costs involved in making arrangements for the intended supply and the costs involved in cancellation of the supply

– The facilitation service of allowing cancellation against payment of cancellation charges is invariably supplied by all suppliers of passenger transportation service as naturally bundled and in conjunction with the principal supply of transportation in the ordinary course of business.

Source Vikash Agarwal

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