The Gujarat Authority of Advance Rulings in an application filed by M/s Rajkot Nagrik Sahakari Bank Ltd. held that Refundable Interest-Free Deposit shall amount to consideration. It shall not be subjected to GST if benefits are allowed with such deposit. Further, a condition to provide the first 10 free transactions allowed to the Demat account holders is in the nature of discount.
The issues before the bench were:
The Bench constituting of Hon’ble members R.B. mankodi and G.C. Jain held that even though a deposit has been excluded from the definition of consideration by virtue of Proviso to Section 2(31) of CGST Act, notional interest/monetary value of the act of providing the refundable interest-free deposit will be considered as ‘consideration’. “Further, it appears that the Refundable Interest-Free Deposit are an additional commercial consideration to cover the risk of the Demat account. It appears that the main purpose of the deposits is not only security but also the collection of capital. It is also not out of place to mention that the said services were chargeable to Service Tax under the erstwhile provisions of Service Tax era. GST related provisions are also broadly pari materia so far as services are concerned.”
With respect to the second issue, the Authority referred to the Proviso to Section 2(31), which makes it clear that the incumbent amount shall not attract GST.
With respect to the third issue, it has been held that “the first 10 free transactions allowed to the Demat account holders are in the nature of the discount and will not attract GST subject to the fulfilment of the conditions prescribed under Section 15(3) of the CGST”
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