Held - We find that the exemption for financial transactions under GST laws is only in respect of the interest/discount earned or paid for loans, deposits or advances. If the transaction, as in the subject case deviates from the above the same fails the test of being a “loan”, ‘“deposit” or “advance”, or the consideration is not an interest or discount, the exemption is not admissible. In the subject case the amount of penal charges cannot be said to form a part of interest on “loan”, “deposit or “advance”. It is recovered/imposed only because the loanee has delayed the payment of EMI (which consists of the principal amount and interest amount). This recovery of penal charges is made in view of toleration of the act of the loanee by the applicant and therefore construes as ‘supply’ as per as per Sr. No. 5(e) of Schedule II of the CGST Act and is therefore taxable under the GST Act.The said activity squarely falls under clause 5(e) of the Schedule II of the GST Act, 2018 and therefore such amounts received, would attract tax liability under GST laws.

Held - We find that the extension of loan by the applicant (DCA) to the customers is a transaction separate from the transaction of supply of goods by the principal to the customers against consideration wherein the applicant (DCA) also gets the commission from the principal.We find that the interest received by the applicant is consideration towards loan extended to the customers and such interest is not towards the payment of consideration for supply of goods by the principal to the customers, which, as we have already observed, is a separate transaction.As per the aforesaid Sl. No. 27 of the table to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services) is exempt from payment of Goods and Services Tax. As in the transaction of extension of loan by the applicant, the consideration is received by way of interest, the same is covered by the aforesaid Sl. No. 27 of the table to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and hence exempted from payment of Goods and Services Tax.

Held - The collection of defaulted / delayed instalments is a service performed by the foreman in relation to a chit. The appellant has been attempting to divert attention from this fact by bringing in the concept of actionable claims, etc. As seen from the law on Chits cited, it is clearly evident that it is the job of the foreman to collect defaulted instalments for which the penal interest of 18% as per law is collected by him and he is further permitted to retain the same by law. Hence, the interest so collected for the service rendered in relation to a chit, will be liable to GST at the rates applicable under HSN Heading 9971, (Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017) as it is earned in connection with the supply of service by the foreman to the chit.The collection of delayed instalments along with interest / penalty from the members of a chit constitutes the taxable supply of the Services provided by a foreman of a chit fund in relation to chit.The Services provided by a foreman of a chit fund in relation to chit is classified under HSN Heading 9971 under Notification No. 11/2017-CentraI Tax (Rate) Dated 28-6-2017 / Notification No. 8/2017-lntegrated Tax (Rate) dated 28-6-2017 as amended from time to time. The rate of tax would be as applicable under the said heading 9971 of the cited notifications, depending on the nature of supply, i.e., intra state or interstate.