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The interest charged for delay in delivery of goods is taxable under Section 9 of CGST Act, 2017. The said service merits classification under HSN 999794.

Authority for Advance Ruling — Tax on interest charged for delay in delivery of goods – The applicant acts as a procurement agency for and on behalf of the Government of Haryana and Government of India through Food Corporation of India and their agencies. The Applicant purchase paddy from the arthias situated at various market committees and gets the same milled from rice millers. The applicant enters into the contract with the rice millers as per the rates defined/ fixed by the Central Government. As per the contract, rice millers are charged 12% per annum on daily basis in the form of interest for delay in delivery of milled rice. The applicant sought an advance ruling as to whether interest charged for delay in delivery of goods is taxable under Section 9 of the Act, 2017 or exempt under Section 11 of the Act, 2017; what is the HSN Code of the service mentioned in Para (a) supra. Held that:- The Hon’ble Authority ruled that the interest charged for delay in delivery of goods is taxable under Section 9 of the Act, 2017. The said service merits classification under HSN 999794.
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