As the county moves to GST, we are offering extensive research, trainings, workshops and services to help our clients transition to the new regime.

We anticipate clients in the financial services industry to expect a bouquet of services to enable a smooth transition to the GST. Some of the services we are providing are:

-Impact study of GST:  includes studying implications of GST on organizational cash flows
-Assisting in identifying the different benefits that can be availed by the company
-Preparation of detailed checklists for GST administration
-Organizing intermediate and advanced training programs for groups of employees based on specific organizational needs
-Reviewing the existing documentation to ensure that they are aligned with the law

Write to us at gst@vinodkothari.com if you wish to know further details with respect to the above.

For our workshops and training click here

Please drop an email to events@vinodkothari.com to register your interest.

PENAL INTEREST WITHIN THE SCOPE OF GST OR NOT?

By Beni Agarwal (beni@vinodkothari.com)

Introduction

A recent advance ruling has thrown the financial industry off its balance. The pre-ruling opinion amongst the industry members has been refuted and yet another item has been brought within the ambit of GST, that is, penal interest or overdue interest. Before the aforesaid advance ruling, which we have discussed at length later on, there were various views circulating in the market. Some said penal interest should be charged to GST, while others said that it is nothing but interest for using the amount for the extended period of time.

However, all these speculations have been put to rest, first, by a set of frequently asked questions on GST on financial services, and second, by the aforesaid advance ruling. In this write-up we intend to discuss the outcome of the advance ruling and comment on how justified the decision is.

Background

After the imposition of GST since 1st July, 2017, various supplies have been brought within the ambit of GST. There are some supplies which have been exempted from GST levy vide notification no 12/2017- Central tax (Rate) dated 28.06.2017, by way of powers vested with the Central Government through section 11 of CGST Act 2017. One such supply that is exempted is services by way of extending deposits, loans or advances, in so far as the consideration is exempt by way of interest or discount. Based on the exemption and its interpretation that such penal interest is nothing but additional interest, the view was that penal interest too shall not be subject to GST. However, the FAQs on Banking Sector[1], issued by GST Council, clarified that additional interest charged on delay or default in payment of installment by the customer shall be included in the taxable value of supply. The recent advance ruling in the case of Bajaj Finance Limited, [2]would give additional weightage to the FAQs.

Earlier Stance

In case of a loan transaction, it was argued that the overdue interest was merely a stepped-up interest, for the period for which the contractual terms of the loan had been in breach. Overdue interest is, admittedly, nothing but interest, albeit at a higher rate. It could not be argued that a delayed payment for a loan led to any service. Typically, interest is based on the tenure for which the loan is due/overdue. If there is an element which is charged disregarding the tenure, that is, on absolute basis, it may, then, not qualify to be interest, and hence, become chargeable to GST.

Advance Ruling by the Adjudicating Authority

In case of Bajaj Finance Limited, an advance ruling has been passed on 6/08/2018 on imposition of GST on penal interest.

In the said case, BFL gave loan to customers for a specific period repayable in EMIS including principal and interest amount. Failure to pay within the due date attracts penalty charges based on a certain percentage. In the process, BFL agreed to tolerate the act of delayed payment in lieu of penalty.

The following questions were asked and answered:

Q1.  Whether the penal interest is to be treated as interest for the purpose of exemption under Sr 27 of Notification no 12/2017- Central tax ( Rate) dated 28.06.2017, Sr no 27 of Maharashtra State Notification No 12/2017- State Tax ( Rate) dated 29.06.2017, and Sr no 28 of Notification No 9/2017 Integrated Tax (Rate) dated 28.06.2017?

Answered in the negative.

Q2. If the answer to the above is negative, whether the activity of collecting penal interest by BFL would amount to a taxable supply under the GST?

                Answered in the affirmative. The said activity squarely falls under clause 5(e) of the Schedule II of GST Act, 2018 and therefore such amounts received, would attract tax liabilities under GST.

Hence, basis the above mentioned advance ruling, interest on penal charges shall be liable to GST.

Treatment of Penal Interest under Service Tax Regime

Interest on loans were outside the scope of Service Tax in the pre GST period. Lending as a service was first time brought within the ambit of Service Tax on 10.09.2004 , by an amendment in the definition of banking and other financial services’ under section 65(12) of Finance Act, 1994. At the same time, with effect from 10.09.2004, by virtue of clause (viii) of

Explanation 1 under section 67 of Finance Act, 1994 , the following was added:

“SECTION 67. Valuation of Taxable Services for charging service tax: For the purposes of this chapter, the value of taxable services shall be the gross amount charged by the service provider for such service rendered by him.

Explanation 1. For the removal of doubts, it is hereby declared that the value of taxable service, as the case maybe includes …

But does not include ...

(viii) interest on loans.”

Thus, from 10.9.2004, interest on loan was out of the purview of Service Tax under section 67.

However, from 19.04.2006, the valuation provisions contained in Finance Act was shifted to Service Tax ( Determination of Value) Rules , 2006, which provided the following:

“6. Cases in which commission, costs, etc will be included or excluded-

  • Subject to the provisions of Section 67, the value of taxable services shall include-
  • Subject to the provisions contained in sub rule(1), the value of any taxable services, as the case may be, does not include

(iv) interest on loan”

Hence from 19.04.2006, interest on loans was excluded from value of taxable services by way of Service Tax (Determination of Value) Rules, 2006.

Further, from 1.07.2012 to 30.06.2017, interest on loan was exempted under Negative List clause(n) of Section 66D of Finance Act, 1994. The same read as under:

SECTION 66D. Negative List of Services: The negative list shall comprise of the following services, namely-

(n) services by way of-

(i) extending deposits, loans or advance in so far as the consideration is represented by way of interest or discount

Thus, throughout the period before GST, interest on loan was excluded from levy of tax by way of provisions as stated above.

Rationale behind the current Ruling

Imposition of GST on penalty by the name of penal charges, penal interest or penalty is backed by the following arguments:-

  • Schedule II, entry 5 of CGST Act, includes services in the scope of supply as “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act “. Thus, it is contended that there is a service of tolerating an act because there is toleration of the act of default or situation of default of the loanee or borrower by the Lender in exchange for default charges named as penal interest. The nomenclature does not alter the substance of the transaction. Penal charges are charges on over-due amount. Thus, penal charges falls within the scope of supply under the CGST Act, Section 7.
  • EMI calculation is done based on the amount of loan and the total tenure of loan. Interest is calculated keeping in mind the total life of the loan over which the principal shall be outstanding as reduced by the installments paid. Delay or default in payment of EMI is not factored in. The contention that it is separately charged and hence it is in the nature of interest, is invalid. This is because, the percentage of charge is on a per month basis of default. It does not encompass the entire life of the loan. It arises only when there is a default or delay and it is calculated for that period of delay. This is obviously not factored in as there is no encouraging effect of the erring activity on the part of the borrower. Hence, it is not an additional interest. Moreover, these are in the form of compensation charged for tolerating the act of default or delay and not in the nature of interest capturing the time value of money.
  • Default charges are defined within a specified range, say 2 % to 5 % and varies from customer to customer. Moreover, a specified percentage is generally set beyond which the charges will not go. This is not the characteristic of interest.

Critical Analysis of the Ruling

The ruling has caused a jolt to the financial industry. There are several contentions that seem impractical and not carefully thought of. First of all, to state that penal charge is a compensation to tolerate an act is not completely justified. Penal interest is deterrent in nature as the lender is deterring or discouraging the borrower from delaying the payment by imposing a penalty. It is in the nature of additional interest on overdue amount. Interest charged is exempt from GST ambit which implies that it is not considered as supply to tolerate an act. If that is the case, then how can additional interest be considered as something to tolerate an act of delay or over-due. Its nature is similar to interest and interest is considered as a rate for incorporating time value of money and not classified as an act to tolerate the period in which the lender was devoid of that money.

Further, it is a top up on the rate of interest that is charged on the loan amount. Interest rate is the amount of money charged by the lender for usage of money which is calculated keeping in mind the time value of money. Penal interest is an add-on to the normal interest rate. If interest is considered as time value of money, then how can additional interest be considered any different? Penal interest is the interest rate charged on the over-due amount which is just a notch up on the existing rate.

To contend that the penal interest charged deviates from the nature of interest, because it is varying in nature, is a little funny. This implies that specifying a range of top up like 2% to 4% as against a fixed 10 % is grave enough to challenge the nature of interest. To state that the rate of penalty charged is varying from customer to customer and hence drifts away from the nature of interest is quite strange. The selection of rate of interest and charging them on customer basis should not be a point to declare that penal interest digresses from basic interest. There are a set of factors that determine the rate of interest to be charged from different customers.

Also, it is very important to note that charging GST in a sector that is already under the brunt of Non-Performing Assets (NPAs) is quite damaging to the banking and financial sector. We are talking of a sector where default or NPAs is a norm. The sector is already burdened with NPA and the problem is aggravated further by imposition of GST. Penal charges are collected by banks and it is their liability to pay to the Government. Whether or not they can shift the burden to the customers is a matter left on the banks. We are speaking about the customers who have made the delay or default and hence they are not the ones with best payment ability or willingness. Indeed it is very much possible that the ultimate burden may not be shifted to the customers and stay with the banks only. This burden of GST in addition to NPAs is definitely not a welcome change for banks and banking sector.

Argument for the earlier view taken

By way of notification no 12/2017- Central tax ( Rate) dated 28.06.2017, under serial no 27, services by way of extending deposits, loans or advances, in so far as the consideration is exempt by way of interest or discount( other than interest in connection with credit card services) have been excluded from the levy of GST.

Further clause (zk) of para 2 of the said notification defines interest as “interest payable in any manner in respect of monies borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does not include any service fee or other charge in respect of the monies borrowed or debt incurred or in respect of any credit facility which has not been utilized.”

Penal Interest are meant to include overdue charges on non-payment of installment on the due date. This was meant for compensating the lender for the time value lost for the extended use of loan proceeds. EMI amount factors in the interest portion for the tenure of the loan, but these additional charges are over and above the interest factored in.

Section 7 (1)(d) of CGST Act refers to Schedule II to include services that shall be considered supply. Entry 5 of Schedule II, includes the following as supply “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act “.

It was argued that the expression to tolerate an act cannot be said to include situation wherein penal charges are imposed on the erring party for delayed or non-payment. This is because, this is not the intention at the very inception, to undertake the activity of default or delay with no hindrance from the other party. The clause of penalty is created with a deterrent effect so that the activity is not repeated by the erring party.

Furthermore, the international laws like Australian Law does not impose GST on penal interest.

Potential impact of the Ruling on the Financial Industry

Penal Interest shall be subject to GST as per the recent AAR ruling, as it is not ruled to be in the nature of additional interest, but it is classified as supply under GST. The AAR ruling has adopted a position which is contrary to the historical approach adopted by financial services industry.

– Increase the working capital burden of Financial Institutions: The output GST liability shall block the working capital thereby increasing the working capital requirements. 18% GST on penal interest amount shall be required to be paid to the government by the banks. The output GST shall be recorded in the books as a liability payable.  This liability did not arise till now and hence there was no additional burden on the working capital of financial institutions. But with the new ruling, financial institutions will face a working capital crunch.

– Pinch on the customers’ pocket: The amount of interest on loans or deposits or advances did not attract service tax during pre GST era and does not attract tax during the current GST tax regime as well. However, the penal interest is not in the nature of interest and hence shall be chargeable to GST. The banks may transfer the GST payable on penal charges to customers. This will pinch the pocket of the customers.

– Increased litigation: The ruling has gone against the long standing opinion in the financial industry and it is not going to be accepted without any further appeals. This may give rise to potential dispute and may register appeals in higher platforms. Also as these rulings serve as precedents for other cases, it will give rise to several related litigations in the process.

Conclusion

Putting an end to the industry-wide confusion , AAR has ruled, based on the provision in Schedule II, entry 5 of CGST Act 2017, that penal charges shall be considered a supply under GST and hence be a part of value of taxable supplies. According to the ruling, imposition of penal charges indicate a clear understanding between the parties that in case of delay in payment of the agreed upon amount, a penal charge shall be imposed which will be payable by the person in default as consideration for act of tolerance done by the lender. The consideration is clearly in monetary terms. Penalty by whatever name called, be it penal charges or penal interest or additional interest shall be subject to GST as a taxable supply. The ruling does not appear to be practical as it defies the very basic concept of time value of money.

Moreover, it might turn out to be an impediment for the banks and other financial institutions in the NPA-laden finance industry, due to the added disadvantage of GST on penalty. Given the current situation in the country, in most of the cases, it is the banks or the lenders who will have to take the hit. In case of distressed loans, where recovery of principal itself is questionable, expecting the borrower to cough up another 18% on the penal interest is highly irrational.

In all likelihood, this might call for further appeals in the higher forums, as the decision most likely, shall not go down well amongst the industry players.


[1] https://mahagst.gov.in/sites/default/files/ddq/GST%20ARA%20ORDER-22.%20BAJAJ%20FINANCE%20LTD.pdf

[2] http://gstcouncil.gov.in/sites/default/files/faq/FAQs_on_Financial_Services_Sector.pdf

GST on assignment of receivables: Wrong path to the right destination

Team Vinod Kothari Consultants P. Ltd

There has been a lot of uncertainty on the issue of exigibility of direct assignments and securitisation transactions to goods and services tax (GST). While on one hand, there have been opinions that assignments of secured debts may be taxable being covered by the circuitous definition of “actionable claims”, there are other views holding such assignments of debts (secured or unsecured) to be non-taxable since an obligation to pay money is nothing but money, and hence, not  “goods” under the GST law[1]. The uncertainty was costing the market heavily[2].

In order to put diverging views to rest, the GST Council came out with a set of Frequently Asked Questions on Financial Services Sector[3], trying to clarify the position of some arguable issues pertaining to transactions undertaken in the financial sector. These FAQs include three separate (and interestingly, mutually unclear) questions on – (a) assignment or sale of secured or secured debts [Q.40], (b) whether assignment of secured debts constitutes a transaction in money [Q.41], and (c) securitisation transactions undertaken by banks [Q.65].

The end-result arising out of these questions is that there will be no GST on securitisation transactions. However, the GST Council has relied on some very intriguing arguments to come to this conclusion – seemingly lost between the meaning of “derivatives”, “securities”, and “actionable claims”. If one does not care about why we reached here, the conclusion is most welcome. However, the FAQs also reflect the serious lack of understanding of financial instruments with the Council, which may potentially create issues in the long run.

In this note[4] we intend to discuss the outcome of the FAQs, but before that let us first understand what the situation of the issue was before this clarification.

Situation before the clarification

  1. GST is chargeable on supply of goods or services or both. Goods have been defined in section 2(52) of the CGST Act in the following manner:

“(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;”

Services have been defined in section 2(102) of the CGST Act oin in the following manner:

““services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;”

Money, is therefore, excludible from the scope of “goods” as well as “services”.

Section 7 details the scope of the expression “supply”. According to the section, “supply” includes “all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.” However, activities as specified in Schedule III of the said Act shall not be considered as “supply”.

It may be noted here that “Actionable claims, other than lottery, betting and gambling” are enlisted in entry 6 of Schedule III of the said Act; therefore are not exigible to GST.

  1. There is no doubt that a “receivable” is a movable property. “Receivable” denotes something which one is entitled to receive. Receivable is therefore, a mirror image for “debt”. If a sum of money is receivable for A, the same sum of money must be a debt for B. A debt is an obligation to pay, a receivable is the corresponding right to receive.

Coming to the definition of “money”, it has been defined under section 2(75) as follows –

““money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value.”

The definition above enlists all such instruments which have a “value-in-exchange”, so as to represent money. A debt also represents a sum of money and the form in which it can be paid can be any of these forms as enlisted above.

So, in effect, a receivable is also a sum of “money”. As such, receivables shall not be considered as “goods” or “services” for the purpose of GST law.

  1. As mentioned earlier, “actionable claims” have been included in the definition of “goods” under the CGST Act, however, any transfer (i.e. supply) of actionable claim is explicitly excluded from being treated as a supply of either goods or services for the purpose of levy of GST.

Section 2(1) of the CGST Act defines “actionable claim” so as to assign it the same meaning as in section 3 of the Transfer of Property Act, 1882, which in turn, defines “actionable claim” as –

“actionable claim” means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;”

It may be noted that the inclusion of “actionable claim” is still subject to the exclusion of “money” from the definition of “goods”. The definition of actionable claim travels beyond “claim to a debt” and covers “claim to any beneficial interest in movable property”. Therefore, an actionable claim is definitely more than a “receivable”. Hence, if the actionable claim represents property that is money, it can be held that such form of the actionable claim shall be excluded from the ambit of “goods”.

There were views in the industry which, on the basis of the definition above, distinguish between — (a) a debt secured by mortgage of immovable property, and a debt secured by hypothecation/pledge of movable property on one hand (which are excluded from the definition of actionable claim); and (b) an unsecured debt on the other hand. However, others opined that a debt, whether secured or unsecured, is after all a “debt”, i.e. a property in money; and thus can never be classified as “goods”. Therefore, the entire exercise of making a distinction between secured and unsecured debt may not be relevant at all.

In case it is argued that a receivable which is secured (i.e. a secured debt) shall come within the definition of “goods”, it must be noted that a security granted against a debt is merely a back-up, a collateral against default in repayment of debt.

  1. In one of the background materials on GST published by the Institute of Chartered Accountants of India[5], it has been emphasised that a transaction where a person merely slips into the shoes of another person, the same cannot be termed as supply. As such, unrestricted expansion of the expression “supply” should not be encouraged:

“. . . supply is not a boundless word of uncertain meaning. The inclusive part of the opening words in this clause may be understood to include everything that supply is generally understood to be PLUS the ones that are enlisted. It must be admitted that the general understanding of the world supply is but an amalgam of these 8 forms of supply. Any attempt at expanding this list of 8 forms of supply must be attempted with great caution. Attempting to find other forms of supply has not yielded results however, transactions that do not want to supply have been discovered. Transactions of assignment where one person steps into the shoes of another appears to slip away from the scope of supply as well as transactions where goods are destroyed without a transfer of any kind taking place.”

Also, as already stated, where the object is neither goods nor services, there is no question of being a supply thereof.

  1. Therefore, there was one school of thought which treated as assignment of secured receivables as a supply under the GST regime and another school of thought promoted a view which was contrary to the other one. To clarify the position, representations were made by some of the leading bankers and the Indian Securitisation Foundation.

Situation after the clarification

  1. The GST Council has discussed the issue of assignment and securitisation of receivables through different question, extracts have been reproduced below:
  1. Whether assignment or sale of secured or unsecured debts is liable to GST?

Section 2(52) of the CGST Act, 2017 defines ‘goods’ to mean every kind of movable property other than money and securities but includes actionable claim. Schedule III of the CGST Act, 2017 lists activities or transactions which shall be treated neither as a supply of goods nor a supply of services and actionable claims other than lottery, betting and gambling are included in the said Schedule. Thus, only actionable claims in respect of lottery, betting and gambling would be taxable under GST. Further, where sale, transfer or assignment of debts falls within the purview of actionable claims, the same would not be subject to GST.

Further, any charges collected in the course of transfer or assignment of a debt would be chargeable to GST, being in the nature of consideration for supply of services.

  1. Would sale, purchase, acquisition or assignment of a secured debt constitute a transaction in money?

Sale, purchase, acquisition or assignment of a secured debt does not constitute a transaction in money; it is in the nature of a derivative and hence a security.

  1. What is the leviability of GST on securitization transactions undertaken by banks?

Securitized assets are in the nature of securities and hence not liable to GST. However, if some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged, the same would be a consideration for provision of services related to securitization and chargeable to GST.

  1. The fallacy starts with two sequential and separate questions: one dealing with securitisation and the other on assignment transactions. There was absolutely no need for incorporating separate questions for the two, since all securitisation transactions involve an assignment of debt.
  1. Next, the department in Question 40 has clarified that the assignment of actionable claims, other than lottery, betting and gambling forms a part of the list of exclusion under Schedule III of the CGST Act, therefore, are not subject to GST. This was apparent from the reading of law, therefore, there is nothing new in this.

However, the second part of the answer needs further discussion. The second part of the answer states that – any charges collected in the course of transfer or assignment of a debt would be chargeable to GST, being in the nature of consideration for supply of services.

There are multiple charges or fees associated in an assignment or securitisation transaction – such as  servicing fees or excess spread. While it is very clear that the GST will be chargeable on servicing fees charged by the servicer, there is still a confusion on whether GST will be charged on the excess spread or not. Typically, transactions are devised to give residuary sweep to the originator after servicing the PTCs. Therefore, there could be a challenge that sweep right is also a component of servicing fees or consideration for acting as a servicing agent. The meaning of consideration[6] under the CGST Act is consideration in any form and the nomenclature supports the intent of the transaction.

Since, the originator gets the excess spread, question may arise, if excess spread is in the nature of interest.  This indicates the need for proper structuring of transactions, to ensure that either the sweep right is structured as a security, or the same is structured as a right to interest. One commonly followed international structure is credit-enhancing IO strip. The IO strip has not been tried in Indian transactions, and recommendably this structure may alleviate concerns about GST being applied on the excess spread.

  1. Till now, whatever has been discussed was more or less settled before the clarification, question 41 settles the dispute on the contentious question of whether GST will be charged on assigned of secured debt. The answer to question 41 has compared sale, purchase, acquisition or assignment of secured debt with a derivative. The answer has rejected the view, held by the authors, that any right to a payment in money is money itself. The GST Council holds the view that the receivables are in the nature of derivatives, the transaction qualifies to be a security and therefore, exempt from the purview of supply of goods or supply of services.

While the intent of the GST Council is coming out very clear, but this view is lacking supporting logic. Neither the question discusses why assignments of secured receivables are not transactions in money, nor does it state why it is being treated as derivative.

Our humble submission in this regard is that assignment of secured receivables may not be treated as derivatives. The meaning of the term “derivatives” have been drawn from section 2(ac) of the Securities Contracts (Regulation) Act, 1956, which includes the following –

(A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;

(B) a contract which derives its value from the prices, or index of prices, of underlying securities.

In the present case, assignment of receivables do not represent any security nor does it derive its value from anything else. The receivables themselves have an inherent value, which get assigned, the fact that it is backed a collateral security does not make any difference as the value of the receivables also factor the value of the underlying.

Even though the logic is not coming out clear, the intent of the Council is coming out clearly and the efforts made by the Council to clear out the ambiguities is really commendable.


[1] Refer: GST on Securitisation Transactions, by Nidhi Bothra, and Sikha Bansal, at  http://vinodkothari.com/blog/gst-on-securitisation-transactions-2/; pg. last visited on 06.06.2018

[2] At the recently concluded Seventh Securitisation Summit on 25th May, 2018, one leading originator confirmed that his company had kept transactions on hold in view of the GST uncertainty. It was widely believed that the dip in volumes in FY 2017-18 was primarily due to GST uncertainty.

[3] http://www.cbic.gov.in/resources//htdocs-cbec/gst/FAQs_on_Financial_Services_Sector.pdf

[4] Portions of this note have been adopted from the article – GST on Securitisation Transactions, by Nidhi Bothra and Sikha Bansal.

[5] http://idtc-icai.s3.amazonaws.com/download/pdf18/Volume-I(BGM-idtc).pdf; pg. last visited on 19.05.2018

[6] (31) “consideration” in relation to the supply of goods or services or both includes––

(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;