17 June 2014
Query: Dear Sir, My query is,...... A manufacturing company is selling a product to its customer on 45 days credit. The customer at the time of supply of goods itself has asked for 90 days of credit stating the company can charge interest for balance 45 days and has asked for proforma invoice from the company.
So on the value of goods excise duty and sales tax is charged (Since customer belongs to different state CST is levied). on the arrived value, the company is calculating interest @12% for 45 days.
My question is whether on the interest component also sales tax and excise duty to be charged.
Kindly advise.
Please quote the relevant provision or the case law.