In what could impact several businesses at a time when Covid pandemic has disrupted supply chains and payment mechanisms, an Authority for Advance Ruling (AAR) has ruled that interest for delayed payment on imported goods is liable to GST under reverse charge.
As per the details of the case an Indian arm of a Turkey headquartered transformer component manufacturer had imported goods. The Indian arm had obtained a credit facility from the Citi Bank based on corporate guarantee issued by the holding company. For this a stamp duty had to be paid by the Turkey based company on behalf of the Indian arm and reimbursement invoice was raised for the recovery.
The Indian arm had approached the AAR to seek clarity as to whether GST was payable on delay in payment of imported goods and whether the amount paid for reimbursement of stamp duty is liable to GST.