Case Law Details
In re Ushabala Chits Private Limited (GST AAAR Andhra Pradesh)
For the record, it may be noted that under Section 15(2)(d), the said interest or late fee or penalty for delayed payment of any consideration is for any supply. It is not necessary that it flows out of a ‘taxable supply’. Further the word “consideration” has also been defined under Section 2(31) – as “consideration in relation to the supply of goods or services or both includes-” … It may be noticed that again it is in relation to supply of goods and not taxable supply. Hence, the claim of the appellant that the interest element is not taxable as it is arising out of money/actionable claim, etc., does not hold water in light of the statutory definitions cited.
The collection of defaulted / delayed instalments is a service performed by the foreman in relation to a chit. The appellant has been attempting to divert attention from this fact by bringing in the concept of actionable claims, etc. As seen from the law on Chits cited, it is clearly evident that it is the job of the foreman to collect defaulted instalments for which the penal interest of 18% as per law is collected by him and he is further permitted to retain the same by law. Hence, the interest so collected for the service rendered in relation to a chit, will be liable to GST at the rates applicable under HSN Heading 9971, (Notification No.11/2017-Central Tax(Rate) dated 28.06.2017) as it is earned in connection with the supply of service by the foreman to the chit.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act).
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