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Bajaj Finance, a non-banking finance company, has received an order from the Office of the Joint Commissioner, Central Tax, Pune-II Commissionerate, demanding a whopping ₹863.15 crore in GST, interest liability, and penalty. The order includes a GST demand of ₹341.28 crore, an interest liability of ₹180.59 crore up to the date of the order, and a penalty of ₹341.28 crore.
The company claims that it entered into agreements with manufacturers and dealers to offer loans at concessional rates to customers for purchasing consumer durable goods, for which it receives interest subsidies from the manufacturers and dealers. In some cases, Bajaj Finance collects interest upfront from customers. According to the filing, the Joint Commissioner has confirmed a demand for GST on the upfront interest collected as a fee for the period from July 2017 to March 2024.
Bajaj Finance has stated that it is in the process of filing an appeal against the order. The company has sought the opinion of a tax expert, who believes that the demand is not tenable and is likely to be set aside. The company believes that the order is not supported by the GST law and has raised several contentions, which it will rely on in its appeal.
It is worth noting that the exact nature of the agreements between Bajaj Finance and its partners is not explicitly stated in the filing. However, it is clear that the company is facing a significant GST demand and has decided to contest the order through an appeal. The outcome of the appeal remains to be seen, and the company’s hopes of setting aside the demand remain uncertain.