GST not Leviable on Interest from Chit Fund Defaults: Kerala HC sets aside Demand Order against KSFE

The Kerala High Court ruled that Goods and Services Tax (GST) is not leviable on the interest charged by the Kerala State Financial Enterprises (KSFE) for defaults in chit fund payments. The court set aside a demand order issued against KSFE, ruling that such interest payments do not attract GST under current law. The case was significant as it addressed the treatment of financial transactions in the context of chit funds under GST. The judgment clarifies that the interest arising from default in payment is not subject to GST, providing relief to institutions like KSFE involved in chit fund operations. This ruling has implications for similar financial services in India.