2026-VIL-117-GSTAT-RPR
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SGST Tribunal

GST - Exemption on interest income under Entry No. 27 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - Assessing Officer, on scrutiny of returns and finding discrepancy in reconciliation of turnover disclosed in the annual return, issued show cause notice and confirmed a demand of tax, interest and penalty on turnover including amounts claimed by the Appellant as exempted interest income, which order was upheld in first appeal - Appellant contended that the disputed amount represented interest income exempt under the Notification and pressed only the amount relating to interest at the appellate stage - Whether the interest income claimed by the Appellant is exempt from payment of tax under Notification No. 12/2017 - HELD - Entry No. 27 of Notification No. 12/2017 exempts services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, other than interest involved in credit card services - The amount of recovery of any interest is accordingly exempted under the said entry – This question of law answered in favour of the Appellant - Burden of proof to establish entitlement to exemption on interest income under Notification No. 12/2017-Central Tax (Rate) - Appellant claimed that turnover in dispute represented interest income relating to another State erroneously disclosed as turnover of the State in question in the returns, comprising adjustments described as “claw-back interest,” “EIS interest,” “interest reversal,” and “NACL cheque bounce cases” - Despite being called upon by notice to furnish documentary evidence and having submitted a reply along with a Chartered Accountant's certificate, the Appellant did not produce borrower-wise or State-wise documentary evidence substantiating the claim - Whether the transactions in question pertain to income from interest so as to qualify for the exemption under the Notification - HELD - To claim the benefit of the exemption, the Appellant is required to establish by cogent and relevant documentary evidence that the amount in question pertains to interest income relating to another State erroneously disclosed as turnover of the State in question for the relevant financial year - A consolidated audit report or a Chartered Accountant's certificate that does not disclose findings or the documentary basis of examination is insufficient to establish such a claim - Evidence which could have been produced before the Assessing Officer, the First Appellate Authority or the Tribunal but was not produced permits an adverse inference that such evidence, if produced, would be unfavourable to the party withholding it - Even assuming the procedural safeguards alleged to be violated had been complied with, the outcome would not have been different in the absence of documentary proof - this appeal is not acceptable hence the appeal is rejected.
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