TMI Blog2018 (5) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant 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 is a separate transaction. As per Sl. No. 27 of the table to N/N. 12/2017-Central Tax (Rate) dated 28.06.2017, services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services) is exempt from payment of Goods and Services Tax - As in the transaction of extension of loan by the applicant, the consideration is received by way of interest, the same is covered by Sl. No. 27 of the table to N/N. 12/2017-Central Tax (Rate) dated 28.06.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security Deposit against which principal assigns certain limit to the DCA in their system. Within that limit, DCA is allowed to place orders of the customers. At the end of the month, for the orders booked through such DCA and goods supplied by the principal, DCA gets the commission from principal for which DCA raises invoices on the principal along with GST. 2.2 The applicant clarified that the role of the DCA is limited to order booking and ensuring payment to the principal in case of default from the customer. In the entire transaction, neither principal supplies the goods to DCA, nor does DCA supply the goods to customers. Goods are directly supplied by Principal to the customers at the price declared by the principal from time to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debit notes on the customers. Customer pays interest while repaying the loan amount. Such interest payments are subject to TDS in terms of Income Tax Act. 2.5 It is further submitted that normally principal does not continue supply to customer until pending bills are paid by the customer. By following above process, since customer is able to arrange finance by taking short term transaction loan from the DCA, the principal gets the payment and customer gets the un-interrupted supplies. 2.6 In respect of above commercial practice, the aforesaid question has been raised for advance ruling. 3.1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable only on the consideration for supply of goods (on the supplier) and the commission payable to the agent (on the agent). 5. We have considered the submissions made by the applicant in their application as well as at the time of personal hearing. 6. 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. 7. 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f supply shall include - (a) (c)** ** ** (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) ** ** ** 9.2 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. 10.1 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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