In re SPFL Securities Ltd (GST AAAR Uttar Pradesh)
The nature of the delayed payment charges are being summarized below for understanding its taxability under the GST law:-
Where the client makes delay (i.e. beyond T+1 statutory time limit for payment as per SEBI regulations) in reimbursing the expense (being purchase consideration of the securities bought for client and already collected from stock broker by stock exchange with T+l time limit) to the broker and broker charges amount on delay of such reimbursement of expense, for securities purchased from the client.
It is purely a deferment of liability only which arose since the payment was not made within the stipulated period of time by the client to the Stock Exchange for purchase of Securities.
Therefore, since the service of buying and selling of securities which is exempted under GST, as per the definitions of ‘goods’ and ‘services’ under the Section 2(52) and 2(102) of CGST Act, 2017, which provides as under:
Section 2(52):- `goods’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be served before supply or under a contract of supply;
Section 2(102):- services’ means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged,–
[Explanation.- for the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities;]
the corresponding delayed payment charges which are also linked to the above service of trading of securities should also stand exempt under GST.
Applicant is not liable to pay GST on the delayed payment charges on reimbursement of amount by client to Applicant, where client failed to pay amount paid to Stock Exchange for purchase of securities with T+I (trading day plus one day) under SEBI Regulation norms and deducted by Stock Exchange from Applicant account being purchase consideration of securities which are neither goods nor services under GST.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, (UTTAR PRADESH)
(Proceedings under Section 101 of the Central Goods and Service Tax Act, 2017 and Uttar Pradesh Goods and Service Tax Act, 2017)
The present appeal has been filed under Section 100 of the Central Goods and Service Tax Act and Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as “the CGST Act and UPGST Act”) by M/s. SPFL Securities Ltd., 15/63- M, SPFL House, Civil Lines, Kanpur – 208001 (hereinafter referred to as the “Applicant”) against the Advance Ruling Order No.18 dated 14.12.2018 by the Authority for Advance Ruling, Uttar Pradesh.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the UPGST Act.
Brief Facts of the Case
1) M/s SPFL Securities Limited 15/63-M, SPFL House, Civil Lines, Kanpur, Uttar Pradesh, 208001 (here in after called the applicant) is a registered assessee
under GST having GSTN: 09AABCS2452CIZP.
2) The applicant is engaged primarily in the business of providing service of stock broking i.e. purchasing and selling of shares on behalf of the clients on exchange platform by virtue of being a recognized BSE/NSE appointed stock broker.
3) The Applicant submitted application for Advance Ruling dated 20.10.2018, with a issue:- Taxability on Delayed Payment Charges on reimbursement of amount by client to Applicant, where client failed to pay amount paid to Stock Exchanges for purchase of securities with T+1 (trading day plus one day) under SEBI Regulation norms and deducted by Stock Exchanges from Applicant Account being purchase consideration of securities which are neither goods nor service under GST.
4) Applicant was granted hearing on 13.12.2018, Mr. Prakhar Gupta C.A., Authorized representatives appeared for hearing.
5) After going through the submissions of applicant and the Jurisdictional office, Authority for Advance Ruling ruled as under:-
`Applicant is liable to pay GST on the Delayed payment of charges which are overdue from the client towards trading of securities and reimbursed to them.’
6) Being aggrieved with the Order No. 18 dated 14.12.2018, M/s. SPFL Securities Ltd., 15/63- M, SPFL House, Civil Lines, Kanpur – 208001 filed appeal application, submitted the grounds of appeal as Annexure- ‘2’. The grounds for appeal were as under:-
a) Updated FAQ on Banking, Insurance, stock issued by CBIC:- The Appellant submits that the Department has failed to appreciate the most important fact of the case, which if considered will turn the whole balance of convenience in favour of the Appellant. The impugned Ruling has failed to consider the S. No. 80 of FAQ on Banking, Insurance, stock issued by CBIC, The said S. No. has clearly mentioned that :-
