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Service provided by way of extending short term loans in so far as the consideration is represented by way of interest, is covered under Notification No. 12/2017-State Tax (Rate) dated 30.06.2017, and hence exempt from payment of Goods and Services Tax.

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Exempted Service  — Interest an transaction based on short term loan — "Whether an amount charged as interest on transaction based short term loan given by the Del Credere Agent (DCA) to buyers of material is exempt from tax in terms of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (Serial Number 27)? 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. The issue before us is limited to examine whether interest received by the DCA towards extension of loan to the customers is covered by Sl. No. 27 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, or otherwise. Authority for Advance Ruling, Gujarat held that:—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.[2018] 51 TUD 148 (AAR-GUJARAT)

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