Case Law Details
In re Haryana State Warehousing Corporation (GST AAR Haryana)
1. Whether interest charged for delay in delivery of goods is taxable under Section 9 of CGST Act, 2017 or HGST Act, 2017 or exempt under Section 11 of CGST Act, 2017 or HGST Act, 2017 and What is the HSN Code of the service mentioned in Para (a) supra?
On perusal of Para 5(e) of Schedule II of Central Goods and Services Act 2017; it is observed that for an activity to be supply of service there must be an agreement; that there must be benefit and obligation; that there must be a toleration of act.
As submitted by the applicant (a) there is a written contract between the applicant and the rice millers; (b) the rice miller is availing benefit of enhanced period for the delivery of milled rice and it had an obligation under contract to provide the milled goods within specified period and to pay interest in case of delay in delivery of goods and (c) the applicant is tolerating an act of delay in delivery of milled rice by the rice millers and is charging interest (holding charges) on the same and not taking any legal recourse for the specific performance of the contract.
3.7 We agree with the contention of the party. The interest charged by the applicant for delay in delivery of milled rice as per the time prescribed in the contract is a supply of service under Para 5(e) of Schedule II of Central Goods and Services Act 2017.
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