Valuation of supply— Section 15 of CGST Act— In the instant case, the applicant is wholly owned undertaking of Government of Andhra Pradesh. APIIC Limited (applicant) allots the land to the SC/ST/BC entrepreneurs duly collecting certain percentage of the land cost from the entrepreneurs at the time of allotment of land and the sale agreement for the same will be executed on satisfaction of certain allotment conditions by the entrepreneur.

The applicant seeks advance ruling on the following:

APIIC allots the land to the SC/ST/BC entrepreneurs by collecting 25% of the land cost from the entrepreneurs at the time of allotment of land and the sale agreement for the same will be executed on satisfaction of certain allotment conditions by the entrepreneur. With regard to the balance 75% of the land cost, the same will be collected from the entrepreneur in 8 equal annual installments © 16% p.a rate of interest duly providing 2 years moratorium period. The entire interest income on the balance land cost is being recognized in the Financial Year in which the sale agreement is executed.

The applicant approached this authority seeking a clarification, whether the interest amount receivable on the balance land cost is taxable under GST or not.

As per applicant's view Since, the interest collected/ collectable from the entrepreneurs do not fall under the category of entry 27 in notification no. 12/2017 - Central Tax (Rate), dated 28.06.2017, the interest amount is not exempt from tax and it is liable to GST 18%. Further, section 15(2)(d) of the Act is not applicable to this case as sale of land amounts to neither supply of goods nor supply of services as per schedule III of the Act.

In the instant case the applicant, APIIC had given a facility to the beneficiaries, by extending the service of fixation of annual instalments with an interest 16% p.a for delayed payment of 75% of total consideration over a period of time. In such a case, the interest on the credit facility allowed by the applicant is part of the value of taxable supply and shall be liable to GST.

Held that— The interest amount receivable on the annual instalments fixed by the applicant is liable to GST