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TMI Blog2019 (12) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... PROCEEDINGS (under Section 102 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) A. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act. B. In the present case, appeal had been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by Bajaj Finance Limited (herein after referred to as the Appellant or Applicant interchangeably) against the Advance Ruling No. GST-ARA-22/2018-19/B-85 dated 06.08.2018 = 2018 (11) TMI 884 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , which was disposed of vide AAAR Order No. MAH/AAAR/SS-RJ/24/2018-19 dated 24.03.2019 = 2019 (8) TMI 31 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA . However, the Appellant has filed the present application, under section 102 of the CGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted vide Serial No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 6. This Hon ble Authority vide Final Order MAH/AAAR/SS-RJ/24/2018-19 dated 14.03.2019 = 2019 (8) TMI 31 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA rejected the appeal filed by the Applicants and held that the consideration received by the Applicants is for tolerating the act of its customers and would be covered by the entry 5(e) of Schedule II of the CGST Act, 2017. 7. The present application for rectification of mistake in the order passed by this Hon ble Authority has been filed on the following grounds: GROUNDS FOR RECTIFICATION OF MISTAKE 8. The Applicants in its appeal before this Hon ble Authority had made various submissions stating that the additional interest charged from its customers would fall under the exemption granted vide Serial No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 9. The submissions made by the Applicants in their appeal as well as during the time of the hearing is summarized below for reference: (i) The Applicants are only engaged in the business of lending/financing to customers, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff along with interest. In cases where the EMI is not paid at the scheduled time, there is a levy of additional/penal interest on account of delay in payment of EMI. 2. Doubts have been raised regarding the applicability of GST on additional penal interest on the overdue loan i.e. whether it would be exempt from GST in terms of SI. No. 27 of notification No. 12/2017-Central Tax (Rate) dated 28 th June 2017 or such penal interest would be treated as consideration for liquidated damages [amounting to a separate taxable supply of services under GST covered under entry 5(e) of Schedule II of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) i.e. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act ] . In order to ensure uniformity in the implementation of the provisions of the law, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby issues the following clarification. Generally, following two transaction options involving EMI are prevalent in the trade: - Case -1: X sells a mobile phone to Y. The cost of mobile phone is ₹ 40, 000/-. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply of taxable goods i.e. mobile phone. Accordingly, the penal interest would be taxable as it would be included in the value of the mobile, irrespective of the manner of invoicing. Case 2: The additional/ penal interest is charged for a transaction between Y and M/s ABC Ltd., and the same is getting covered under SI. No. 27 of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. Accordingly, in this case the penal interest charged thereon on a transaction between Y and M/s. ABC Ltd. would not be subject to GST, as the same would be covered under notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. The value of supply of mobile by X to Y would be ₹ 40,000/-for the purpose of levy of GST. 6. It is further clarified that the transaction of levy of additional/ penal interest does not fall within the ambit of entry 5(e) of Schedule II of the CGST Act i.e. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act , as this levy of additional/ penal interest satisfies the definition of interest as contained in notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. It is further clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance in this regard is placed upon the decision of the Hon ble Supreme Court in the case of Suchitra Components Ltd. [2007 (208) ELT 321 (SC)] = 2007 (1) TMI 4 - SUPREME COURT wherein it was held that beneficial circulars have to be applied retrospectively. 15. Therefore, the Circular dated 28.06.2019 would have a retrospective effect. It is humbly submitted that wherever a circular/notification is applied with retrospective effect, it has to be deemed that that same was existing at the time of dispute as well. Further, in any case, the present circular merely clarifies the interpretation of the provisions, which have not been changed since the time of the Present Ruling of this Hon ble Authority. 16. The Applicant also submits that the present circular has substantiated the true meaning of law and how it should have been interpreted. The present Ruling being contrary to the true meaning of law and its interpretation is a mistake apparent from the face of record and the same should be rectified. In this regard, the Applicants submit that the Five Member Larger Bench of the Hon ble CESTAT in the case of Hindustan Lever Ltd. [2008 (10) STR 91 (Tri.- LB)) = 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case deserves to be considered and the present Ruling should be rectified in light of the same. 18. For the aforesaid reasons, it is respectfully submitted that the Present Ruling passed by the Hon ble Appellate Authority suffers from ex facie errors which are apparent from the facts on record of the case and the same need to be rectified. It is therefore, respectfully prayed that the aforesaid mistakes in the Present Ruling may kindly be rectified. Personal Hearing 19. A personal Hearing in the matter was conducted on 09.12.2019, wherein Shri Jaydeep Sachdeva, Advocate, appeared on behalf of the Appellant, and reiterated their written submissions filed before us. The aforesaid hearing was also attended by Shri H.G. Kotale, Deputy Commissioner of State Tax and the Jurisdictional Officer in the present matter. Discussion and Findings 20. Heard both the parties. We also perused the application filed under section 102 of the CGST Act, 2017 for the rectification of error in the impugned AAAR order. The applicant, vide their application, have submitted that the impugned AAAR order dated 14.03.2019 needed to be rectified owing to the presence of error, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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