Does liability to pay GST on reverse charge arises if the amount is paid as interest on late payment of invoices of imported goods?

GUJARAT AUTHORITY FOR ADVANCE RULING,
GOODS AND SERVICES TAX,
D/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/01/2021
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2018/AR/34)
 Date: 20.01.2021

Name and address of the
applicant
: M/s. Enpay Transformer Components
India Private Limited.
Plot No. 112, Alindra , Manjusar
GIDC, Savli, Vadodara-391775.
GSTIN of the applicant 24AACCE2260M1ZR

Date of application : 06.07.2018

Clause(s) of Section 97(2) of

CGST / GGST Act, 2017, under
which the question(s) raised.
: (b) applicability of a notification issued
under the provisions of this Act.
(e) determination of the liability to pay
tax on any goods or services or both.

Date of Personal Hearing : 23.12.2020(Through online hearing)

Present for the applicant : Shri Rachit Shah CA

B R I E F FA C T S

The applicant M/s.Enpay Transformers Components India pvt.ltd. PlotNo.112, Alindra, Manjusar GIDC, Savli, Vadodara (hereinafter referred to as Enpay, India) is engaged in the business of manufacturing and supplyingTransformer components. The applicant has stated that the company isimporting goods from the Holding company located at Turkey namely M/s. Enpay Endstriyel Pzarlama ve Yatirim A.S. (hereinafter referred to as Enpay, Turkey) for which the payment terms is 120 days from the date of invoice forimport of goods and if the company M/s.Enpay Transformer located at Indiadoes not pay to Holding company located at Turkey(outside India) on due date,the holding company is charging interest on late payment; that the companyhas obtained bank credit facility from CITI Bank based on the CorporateGuarantee issued by holding company Enpay Endustriyel Pazarlama ve YatirimA.S. and they have paid Stamp tax in Turkey as per their land rules and theyhave raised reimbursement invoice of said payment to ENPAY India; that asmentioned above, the company is importing goods on CIF basis(cost includingfreight) and the invoice that is raised by the seller is clearly showing theamount of Sea freight and it is also noted that at the time of Bill of Entry, the assessable value calculated for payment of IGST includes the value of SeaFreight, hence, IGST is already paid on the value of sea freight at the time of customs clearance.

2. The applicant has asked the following questions seeking Advance Ruling on the same:

(i) Whether liability to pay GST on Reverse charge arises if amount is paid as interest on late payment of invoices of imported goods? If yes, then at what rate?

(ii) Whether liability to pay GST on Reverse charge arises if amount is paid for reimbursement of Stamp tax paid as a pure agent by M/s. Enpay, Turkey on our behalf?

(iii) Whether Entry No.10 of Notification No.10/2017 issued under IGST isapplicable, if import of goods is made on CIF(Cost including Freight basis) where the supplier is charging sea/ocean freight in his invoiceitself and IGST is already paid at the time of Bill of Entry by including the same value of ocean freight in the assessable value?

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