In re Reserve Bank of India (GST AAR Maharashtra)
AAR Maharashtra ruled that penalties, late fees/panel interest, fine of the nature levied and collected by RBI for contravention or violation of provisions of law are not taxable under GST. Further, the penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors are also not taxable under GST.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. RESERVE BANK OF INDIA the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the penalties, late fees/penal interest, fine of the nature, levied and collected by RBI, for contravention or violation of provisions of Law are taxable under GST (as illustrated under Category A in Para 7.4 of Annexure 1 attached to this application)?
2. Whether the penalty of the nature for non-performance or under-performance as per contractual agreement by RBI with third party vendors are taxable under GST? (as illustrated under Category B in Para 7.5 of Annexure 1 attached to this application)
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
