HC held that while remuneration/commission up to 7% of the gross...

HC held that while remuneration/commission up to 7% of the gross chit amount received by the foreman is taxable under GST as per Section 21(b) of the Chit Funds Act, 1982, interest and penalty recovered from defaulting subscribers under Section 21(c) are of a different character. Relying on the characterization of chit amounts as loans recoverable as debt, the Court held that such interest/penalty falls within Entry 27 of Notification 12/2017 as exempt interest on loans and cannot be treated as additional service fee. Orders of the AAR and AAAR were quashed and the writ petition was allowed.

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