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GST leviable on cheque bouncing charges collected from borrowers on account of dishonouring of cheques

August 1, 2019[2019] 108 6 (AAAR-MAHARASHTRA)

GST : Where Appellant (Bajaj Finance) non-banking financial company engaged in providing various types of loans, enters into agreements with borrower/customers for providing interest bearing loans to them and loan agreements provide for repayment of outstanding dues/Equated Monthly Installments (EMI) through cheque/Electronic Clearing System ('ECS')/National Automated Clearing House ('NACH') bounce charges, collected by appellant from their customers/borrowers in event of dishonouring of cheques issued by them or failure of payment through ECS and other electronic means due to non availability of sufficient funds in borrower's/customer's bank account, would attract GST as appellant has tolerated act, or situation of default by borrowers of loan, against some fixed amount/charges agreed to be paid by borrowers and this very activity of appellant viz. tolerating act, or situation of default by borrowers, is adequately covered under provisions of entry 5(e) of Schedule II to CGST Act, 2017 and, thus, amounts to supply of service in accordance with provision of section 7(1)(d) of CGST Act, 2017

Bajaj Finance Ltd., In re [2018] 99 236 (AAR - MAHARASHTRA) affirmed.

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