Case Law Details
In re Ganga STP Project Private Limited (GST AAR West Bengal)
The Ganga STP Project Private Limited was awarded a water treatment project by the National Mission for Clean Ganga (NMCG) & Kolkata Metropolitan Development Authority (KMDA). Payments for the project are structured in a way that includes interest on 60% of the project’s capital expenditure (Capex) due to delayed payments. The key question raised is whether this interest should attract GST.
The Central GST Act and the West Bengal GST Act largely echo each other on this issue. According to section 15 of the GST Act, the value of the supply should include “interest or late fee or penalty for delayed payment of any consideration for any supply.”
The Applicant’s Argument: The company argued that the interest payments serve to compensate for the loss incurred due to the delayed payment of 60% Capex. They believe this should not be subject to GST as it does not form a part of the value of supply.
Counter Arguments: The project authority, KMDA, contended that the interest payments are a time cost linked to the State Bank of India’s Marginal Cost of Funds-based Lending Rate (SBI MCLR). Therefore, it should be included in the value of supply and should attract GST.
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