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TMI Blog2019 (9) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... RAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY MEMBER Present on behalf of applicant Shree Sunil P. Jain PROCEEDINGS (Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods Service Tax Act, 2017) 1. The present application has been filed u/s 97 of the Central Goods Services Tax Act, 2017 and MP Goods Services Tax Act, 2017 (hereinafter also referred to CGST Act and SGST Act respectively) by M/s. INDO THAI SECURITIES LIMITED (hereinafter referred to as the Applicant), registered under the Goods Services Tax. 2. The provisions of the CGST Act and MPGST Act are identical, except for certain provisions. Therefore, unless a specific mention of the dissimilar provision is made, a reference to the CGST Act would also mean a reference to the same provision under the MPGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. 3. BRIEF FACTS OF THE CASE: Applicant is a registered stock broker dealing in purchase/sale of securities for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal supply constituted therein is towards outstanding of securities, thus whole supply will be treated supply of principal supply in accordance with section 8 of CGST Act 2017. Thus wholly exempted. 6. DISCUSSIONS AND FINDINGS: The matter has been brought to us for seeking advance ruling on the matter that the Indo Thai Securities Limited dealing in purchase and sales of securities for and on behalf of their clients and charging Brokerage there on. The applicant acquires securities for and on behalf of its customers and recovers its dues. The dues are mainly consist of two components i.e. amount due towards the security and the brokerage. However sometimes clients delayed the payment and on such delay an additional amount is charged which is termed as Interest/Late fee/ Penalty. Advance ruling is sought on the matter whether there is any Tax Liability on such additional amount (termed as Interest) charged on delayed payment? There are three issues on which advance ruling is Sought:- 1. Classification of any goods or services or both. 2. Applicability of a Notification issued under the provision of this act. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act 2017 w.e.f. 01st February 2019. Section 2(102) of CGST Act: Definition of Services services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. Explanation .- For the removal of doubts, it is hereby clarified that the expression services includes facilitating or arranging transactions in securities. The explanation to the sec 2(102) has been inserted from 01st February 2019 onwards to clarify that the definition of services includes facilitating or arranging transaction in securities. Further Section 8 of CGST Act 2017 deals with composite supply - Sec 8 - Composite supply means a supply is comprising two or more goods/services, which are naturally bundled and supplied in with each other in the ordinary course of business, one of which is a principal supply. In this case stock broking service is the principal supply and all other ancillary supplies shall take colors fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay additional / penal interest amounting to ₹ 500/- per month for the delay. In some instances, X is charging Y ₹ 40,000/- for the mobile and is separately issuing another invoice for providing the services of extending loans to Y, the consideration for which is the interest of 2.5% per month and an additional / penal interest amounting to ₹ 500/- per month for each delay in payment. Case - 2: X sells a mobile phone to Y. The cost of mobile phone is ₹ 40.000/-. Y has the option to avail a loan at interest of 2.5% per month for purchasing the mobile from M/s ABC Ltd. The terms of the loan from M/s ABC Ltd. allows Y a period of four months to repay the loan and an additional / penal interest @ 1.25% per month for any delay in payment. As per the provisions of sub-clause (d) of sub-section (2) of section 15 of the CGST Act, the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply . Further in terms of SI. No. 27 of notification No. 12/2017- Central Tax (Rate) dated the 28.06.2017 services by way of (a) extending deposits, loans or advances in so far as the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged on delayed payment shall be taxed as per original supply i. e. supply of Stock broking services. Moreover the applicability of Notification No. 12/2017 has been discussed in point No 2 Above hence the additional amount being charged cannot be termed as interest and the exemption vide entry no 27 of such notification cannot be applied on the same. 7. RULING (Under section 98 of Central Goods and Services Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017) 7.1. In this case stock broking service is the principal supply and all other ancillary supplies shall take colors from the principal supply itself and it shall be classified as principal supplies i.e. Stock Broking Services. 7.2. In respect of the question raised by the applicant we hold that the applicability of Notification No. 12/2017 has been discussed in point No 2 Above hence the additional amount being charged cannot be termed as interest and the exemption vide entry no 27 of such notification cannot be applied on the same. 7.3. This ruling is valid subject to the provisions under section 103(2) until and unless declared void under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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