In Re: M\/s Shreenath Polyplast Pvt. Ltd.
GST
2018 (5) TMI 809 – AUTHORITY FOR ADVANCE RULINGS GUJARAT – 2018 (13) G. S. T. L. 247 (A. A. R. – GST), [2018] 2 GSTL (AAR) 92 (AAR)
AUTHORITY FOR ADVANCE RULINGS GUJARAT – AAR
Dated:- 19-2-2018
GUJ\/GAAR\/R\/2018\/3
GST
R.B. MANKODI AND G.C. JAIN MEMBER
\nPresent for the applicant: Shri Bhavesh S. Lakhani
\nThe applicant, M\/s. Shreenath Polyplast Pvt. Ltd. has raised the following questions for advance ruling –
\n“Whether an amount charged as interest on transaction based short term loan given by the Del Credere Agent (DCA) to buyers of material is exempt from tax in terms of the Notification No. 12\/2017-Central Tax (Rate) dated 28.06.2017 (Serial Number 27)?
\n2.1 The applicant has submitted in the application for Advance Ruling that they are Del Credere Agent (herein after referred to as “DCA”) appointed by the supplier of goods (herein after referred to as “principal”) and has dual role, the first role is to promote the sale<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ice declared by the principal from time to time by charging applicable GST on the invoice. On the due date, the customer pays to principal directly for the material supplied to them. In case of any delay in payment from the customer, principal charges interest along with GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ts the un-interrupted supplies. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e time of personal hearing. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ue of supply shall include – = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s Shreenath Polyplast Pvt. Ltd.GST2018 (5) TMI 809 – AUTHORITY FOR ADVANCE RULINGS GUJARAT – 2018 (13) G. S. T. L. 247 (A. A. R. – GST), [2018] 2 GSTL (AAR) 92 (AAR)AUTHORITY FOR ADVANCE RULINGS GUJARAT – AARDated:- 19-2-2018GUJ\/GAAR\/R\/2018\/3 GSTR.B. MANKODI AND G.C. JAIN MEMBER Present for the applicant: Shri Bhavesh S. … Continue reading “In Re: M\/s Shreenath Polyplast Pvt. Ltd.”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-11769","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11769"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11769\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n2.3 The applicant reiterated that the role of the DCA is limited to order booking and guaranteeing payment. Supply of material is directly by the principal to the customer. Any delay in supply or any quality issue, it is principal who directly compensates the customer. DCA does not buy, store or sale any material of principal to any customer and therefore there is no transaction of any purchase or sale of goods in his books.
\n2.4 It is submitted that in the entire transaction, the maximum interaction buyer of the material has with DCA. Due to this, on some occasions, when the buyer is not in a position to pay to principal on the due date, he approaches DCA to extend short term loan and the loan is extended by the<\/p>\n
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\n2.6 In respect of above commercial practice, the aforesaid question has been raised for advance ruling.
\n3.1 The applicant submitted that the amount charged by DCA as interest from the buyer of the materials is not liable to tax in terms of Sr. No. 27 of Notification No. 12\/2017-Central Tax (Rate) dated 28.06.2017.
\n3.2 The applicant further submitted that DCA is giving the loan to the buyer and charging the interest thereon from them and accordingly it will be covered under item at serial number 27 of the table attached to the impugned Notification and therefore, no tax would become payable on the amount charged as interest.
\n3.3 The applicant referred to Section 15(2)(d) of the Central Goods and Services Tax Act, 2017 (herein after referred to as the 'CGST Act, 2017) and submitted that the said provision does not apply to the facts of the present matter. They submitted that in the present case, in the commercial practice as explained earlier, DCA <\/p>\n
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\n6. The issue involved is whether an amount charged as interest on transaction based short term loan given by the applicant, working as Del Credere Agent (DCA), to buyers of material, is exempt from Goods and Services Tax in terms of Sl. No. 27 of the table to Notification No. 12\/2017-Central Tax (Rate) dated 28.06.2017, or otherwise.
\n7. In the case of transaction of supply of goods through DCA, the principal supplies the goods to and receives payment from the customers. In case of failure of customer to make payment, the DCA makes payment to the principal. The DCA gets the commission from principal. It is submitted by the applicant that when the buyer is not in a position to pay to principal on the due date, he approaches the DCA, who extends short term loan by making payment to the principal on behalf of the customer and the loan is repaid to DCA by the customer along with agreed interest. It is also submitted that sometimes, customer does not make paymen<\/p>\n
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\n(a) & (c)** ** **
\n(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
\n(e) ** ** **”
\n9.2 We find that the interest received by the applicant is consideration towards loan extended to the customers and such interest is not towards the payment of consideration for supply of goods by the principal to the customers, which, as we have already observed, is a separate transaction.
\n10.1 Notification No. 12\/2017-Central Tax (Rate) dated 28.06.2017, as amended, provides exemption to supply of various services, as specified in column (3) of the table to the said Notification. Sl. No. 27 of the table to the said Notification provides as follows:-
\nTABLE
\nSl. No.
\nChapter, Section, Heading, Group or Service Code (Tariff)
\nDescription of Serv<\/p>\n
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