Interest/penalty charged on delayed payment of subscription is a supply of service: AAAR

  • Blog|GST & Customs|News|
  • |
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 4 May, 2022

GST Supply of Service

Case Details: Appellate Authority for Advance Ruling, Andhra Pradesh Ushabala Chits (P.) Ltd., In re - [2022] 137 318 (AAAR - Andhra Pradesh)

Judiciary and Counsel Details

    • Peeyush Kumar and Naresh Penumaka, Member
    • R. Narasimha Murthy, AR for the Appellant.

Facts of the Case

The appellant was a company engaged in conducting chit auctions. It filed an application for advance ruling to determine whether interest/penalty collected for delay in payment of monthly subscription by the members would be treated as supply under GST. The Authority for Advance Ruling held that interest/penalty charged on delayed payment of subscription by members of chit fund would be supply under GST and liable to tax. It filed appeal against the order.

AAR Held

The Appellate Authority for Advance Ruling observed that the collection of delayed/defaulted instalments and penal interest thereon would be a service rendered in relation to chit. Therefore, the collection of defaulted instalments and interest thereon by foreman shall be considered as a supply of service in relation to chit and would fall under SAC 9971 as services shall be provided by foreman of chit fund in relation to chit.

Case Review

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied