1. GST would be applicable on cheque bouncing charges: AAR

[Maharashtra v. Bajaj Finance Limited - [2018] 100 taxmann.com 396 (AAR)]

The applicant, a NBFC is engaged in providing various types of loans to the customers, such as auto-loans, loans against the property, personal loans, consumer durable goods loans, etc. It has entered into agreements with borrowers/customers for providing loans to them. The loan agreements provide for repayment of the outstanding dues/EMI through cheque/ECS/NACH or any other electronic or clearing mandate. In case of dishonouring of payment instrument or instruction, the applicant collects the penal or bouncing charges. The applicant filed an application for Advance Ruling whether the bouncing charges should be treated as supply? It contended that bouncing charges collected from the customers are in the nature of penalty or liquidated damages. Therefore, same are not considerations for supply of services and, hence, not subject to GST levy.


The Authority for Advance Ruling held that the receipt of cheque bouncing charges on dishonouring of cheques would be receipt of amounts for tolerating the act of their customers it dishonouring of cheque. Therefore, it would be treated as supply under GST as per S. No. 5(e) of Schedule II of the CGST Act, 2017 and, hence, taxable under the GST Act.


2. Penal Interest Charged on default in EMI payment is taxable under GST: AAR

[Bajaj Finance Limited, In re-[2018] 99 taxmann.com 236 (AAR - Maharashtra)]

     The applicant was engaged in providing various types of loans to customers. The applicant received penal charges on delayed payment of EMIs of loans. The applicant filed an application for advance ruling to determine whether penal charges on delayed payment of EMIs of loans would be considered as supply?


The authority observed that penal charges on delayed payments would be considered as receipt of amounts for tolerating an act of their customers for having delayed/defaulted on their EMI payments within due dates. The amount received as penal charges would not be considered as additional interest and, therefore, was to be treated as 'supply' under the GST Act. Therefore, penal Interest on default in EMI payment would be taxable under GST.


3. Sale of Religious books or DVDs in Satsang would attract GST: AAR

[Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra, In re- [2018] 97 taxmann.com 20 (AAR - Maharashtra)]

The assessee filed an application for Advance Ruling on whether the sale of spiritual products such as books, DVDs, etc., could be treated as supply as per GST Act? It contended that the money earned from such goods was used for main object only, i.e., for charitable and religious purposes. Therefore, such an activity could not be treated as an activity of carrying out business.


The Authority for Advance Ruling held that there was no specific exemption to registered charitable trusts for supply of such goods under GST. The sale of spiritual products which was incidental or ancillary to main charitable object of assessee could be said to be business. Therefore, the sale of spiritual products could be treated as supply under the GST Act and GST would be applicable on it.


4. Transfer of business as 'Going Concern' is exempt from GST: Karnataka AAR

[Rajashri Foods (P.) Ltd., In re- [2018] 93 taxmann.com 417 (AAR-Karnataka)]

     The assessee has manufacturing units. It intends to sell one unit along with all its assets and liabilities for a lump sum consideration. It filed an application for Advance Ruling on the following two issues.

1. Whether such transaction would be deemed as supply of goods or supply of services or both?
2. Whether such transaction would be exempt under S. No. 2 of the Notification No.12/2017-Central Tax (Rate), dated June 28, 2017?

      The Authority for Advance Ruling held that the business will continue in new hands. Hence, such transaction would be in the nature of a going concern. When the business is transferred as a going concern, then it does not amount to supply of goods as per part 4(c) of the Schedule II of the Central GST Act. Further, the column no. 3 of the Table in the Notification No. 12/2017-Central Tax (Rate) gives the description of the services. Therefore, such transaction would be treated as 'Supply of service' and, hence, would be exempt from GST as per S. No. 2 of the Notification No.12/2017-Central Tax (Rate), dated June 28, 2017.

https://taxguru.in/wp-content/uploads/2017/11/Notification-No.-12-2017-Central-Tax-Rate.pdf



5. Supply of food and beverages in trains to be considered as supply of 'Goods': AAR

 [Deepak & Co., In re. - [2018] 93 taxmann.com 94 (AAR - New Delhi)]

       The assessee was engaged in supply of food and beverages to the passengers in trains as per the menu and tariff approved by the Indian Railways. It contended that the supply of any food or beverage should be taxable at 5% if they are consumed on or away from the premises. It filed an application for advance ruling for the same.

       The Authority for Advance Ruling held that the train is a mode of transport and cannot be called as a restaurant, eating joint, mess or canteen, etc. Therefore, the supply of goods, i.e., food, bottled water, etc., should be charged to GST on the value of individual items at the applicable rates as there is no element of service in it.
Disclaimer:  the above Information has been prepared for convenience and easy reference for trade and business and has no legal binding or force. Notifications as published in the official Gazette of Government of India have the force of law.