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TMI Blog2018 (5) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and take orders for goods to be supplied by the principal directly and the second role is to guarantee the principal for the payment of goods supplied. If customers fail to make payment, DCA is required to make the payment to the principal. Normally, Principal takes Bank Guarantee (BG) and / or 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DCA by making payment to the principal on behalf of the customer. The loan is repaid to DCA by the customer along with agreed interest. The rate of interest on such short term transaction based loan (from 10 days to 90 days) is as mutually agreed between buyer of the material and DCA. Sometimes, customer does not make payment to the DCA and gives Letter of Credit (LC) for 60 / 90 days, which DCA gets discounted with the bank. In this transaction also, interest is payable for the period until LC is discounted. For interest, DCA raises 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 principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest is charged towards loan given to the customers and hence such interest will be covered under item 27 of the table attached to the impugned notification. 4. State Tax, GST Cell has given its opinion as under:- "The Del Credre agent receives higher commission because he ensures payment to the supplier. Whether the agent extends a loan to the buyer for making payment to the supplier or whether the agent himself makes payment on behalf of the buyer, no amount towards this shall be added to the price and GST will be leviable 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst consideration wherein the applicant (DCA) also gets the commission from the principal. The issue before us is limited to examine whether interest received by the DCA towards extension of loan to the customers is covered by Sl. No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, or otherwise. 9.1 Section 15(2)(d) of the CGST Act, 2017 and the Gujarat Goods and Services Tax Act, 2017provides as follows:- "15. Value of taxable supply. ---- (1) .................. (2) The value of supply shall include - (a) & (c)** ** ** (d) interest or late fee or penalty for delayed payment of any consideration for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 the aforesaid Sl. No. 27 of the table to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and hence exempted from payment of Goods and Services Tax. 10. In view of the foregoing, we rule as under - RULING Service provided by M/s. Shreenath Polyplast Pvt. Ltd. (GSTIN 24AACCS9788C1Z3) by way of extending short term loans in so far as the consideration is represented by way of interest, is covered under Sl. No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017, and hence exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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