Classification of servie— The present appeal has been filed against the Advance Ruling issued by the Authority for Advance Ruling, Andhra Pradesh.

The issue at hand for discussion is whether the interest / penalty charged on the delayed payment of subscriptions by Members of a Chit Fund, is a supply liable to GST under the GST law.

Advance Ruling Authority, Andhra Pradesh, in the order held that the said interest/penalty is classified under Sl. No 15 of Heading 9971 Financial and related services, GST @12% as per Notification No. 8/2017-Integrated Tax (Rate) dated, the 28th June, 2017 as amended from time to time.

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 as it is earned in connection with the supply of service by the foreman to the chit.

Held that— 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.