Recently we came across various Advance ruling under GST from different advance ruling authority some of which were supported by CBIC and some of which were further clarified by the department.
Advance ruling is something related to interpretation of law and is applicable only in the case of assessee who has sought the same.
In a recent Advance ruling by Gujarat Authority for Advance Ruling it was concluded that interest from saving bank, PPF and personal loans would be considered for calculation of aggregate turnover.
Similar view was taken in a recent advance ruling by Karnataka authority for advance ruling.
In the present case, taxpayer was earning income from rent and interest. Tax payer was of the opinion that Interest Receipts is not a Supply and does not attracts GST, as the same is neither “In the course of Business”nor “In the furtherance of Business”.
Observation and Ruling by AAR:
In the ruling AAR discussed various definition under the GST act such as: aggregate turnover, supply, exempt supply, Nil rated supply etc. wherein aggregate turnover means:
“the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.”
Also, definition of supply was discussed which is as under:
Supply has two important elements:
a) Supply is done for a consideration;
b) Supply is done in course of furtherance of business.
Now, Notification No. 12/2017 – Central Tax (Rate) and Notification No. 9/2017 – Integrated Tax (Rate), both dated 28.06.2017,as amended, provides a list of services exempted from payment of Central Tax on intra-State supply and Integrated Tax on Inter-State supply. Entry 27(a) of theNotification No. 12/2017and Entry 28(a) of the Notification No. 9/2017 relates to services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest.
Based on the above definitions it was concluded that interest on such loan/ deposit would be considered for calculating aggregate turnover and hence GST needs to be charged on Rent of commercial property.
It is worthwhile to mention that no consideration was provided to the fact that such services were not provided during the course of business or furtherance of business. Therefore, according to such view each person providing such personal loan should be beware and check if he is providing any such services.
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