Case Law Details
In re M/s. Indo Thai Securities Limited (GST AAR Madhya Pradesh)
It is clear from the simple reading of 15(2)(d) that the interest, late fee or penalty charged from customer shall be added to the transaction value and hence shall be taxable at the rate at which such goods/ services are taxable or in other words the classification of interest, late fee or penalty cannot be different from the classification of goods or services.
Here in the given case applicant is stock broker engaged in the activity of purchase and sales of securities for & on behalf of it’s customers and the consideration is being charged in the form of brokerage as a fixed percentage of transaction value. Having regard to the trade parlance it is also clear that stock broker gives a reasonable time to its customer to make the payment however if the customer do not make the payment within the stipulated time then an additional amount is being charged it may be termed as different names i.e. Interest, Late fee or Penalty.
Stock broker recovered amount from its customer is having two components i.e. Brokerage and the amount of security purchased by it. In case of delay in payment interest, late fee or penalty is charged on entire amount due including the amount of security. As far as classification of interest, Late fee or penalty is concern it shall be same as nature of principal service. The classification of interest, late fee or penalty cannot be different from the principal supplies. In this case the principal supply is stock broking services for which the consideration is charged in the form of brokerage.
The additional amount being charged on delayed payment termed as Interest, late fee or penalty on the amount of brokerage and the amount of securities cannot be bifurcated as such additional payment do not have its own classification, It is taking colour from original supply i.e. supply of stock broking services.
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