2019 (1) TMI 418 – AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH – TMI – Levy of GST – Transmission or Distribution of electricity by an electricity transmission or distribution of electricity utility with respect to the Delay Payment Charges recovered by the applicant from its consumers – Entry no. 25 of notification 12/2017- Central Tax (Rate) Dated 28/06/2017 – applicable rate of tax – HSN/SAC code for Delayed Payment Charges – Held that:- The Delayed payment surcharge is a part of Tariff prescribed by MPERC. The Company recovers the said charge at rates fixed by the Authority. The Delayed Payment Surcharge is billed to consumer when the bill is paid by the consumer after the due date mentioned in the bill. The Delayed Payment Surcharge may be mentioned in the bill as Surcharge on Outstanding Amount or Late Payment Surcharge. Thus the nature of the service is interest/ late fee/ penalty for delayed in payment of consideration.
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As per the provision of Section 15(2)(d) of CGST A
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he other services as per circular no. 34/8/2018- GST, dated – 01st March, 2018).
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The Delayed payment surcharge cannot be treated as separate service and same shall be included in the value of initial service. Thus, portion of Delayed payment surcharge attributable to exempted supply shall be exempted and portion of Delayed payment surcharge attributable to taxable supply shall be taxable.
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Ruling:- The Delayed payment surcharge/ Late Payment Surcharge/ Surcharge on outstanding amount (by whatever name called) cannot be treated as separate service and same shall be included in the value of initial supply to which such charges relate, and the portion of Delayed payment surcharge attributable to exempted supply will be exempted and the portion of Delayed payment surcharge attributable to taxable supply is taxable at the rate on which the corresponding supply is taxed. – Order No. 19/2018 Case No. 20/2018 Dated:- 22-11-2018 – RAJIV AGRAWAL AND MANOJ KUMAR CHOUBEY MEMBER Present
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the GST Act. 3. BRIEF FACTS OF THE CASE – 3.1 The Applicant is a Public Sector Undertaking fully owned by Government of Madhya Pradesh and engaged in distribution and supply of electricity in 20 districts of Madhya Pradesh. 3.2 Applicant is involved in electrification work in to the rural and urban areas under the various Government Schemes; it supplies electricity to all the commercial users and noncommercial consumers and recovers charges for supply of electricity along with other non-tariff, 3.3 Applicant issues bills of supply of electricity to its consumers, which has a particular due date to pay, every payment received after the due date mentioned in bills is liable to pay delay payment charges. 4. QUESTION RAISED BEFORE THE AUTHORITY – Whether applicant is eligible to avail the exemption from the levy of GST under Entry no. 25 of notification 12/2017- Central Tax (Rate) Dated 28/06/2017 bearing description 'Transmission or Distribution of electricity by an electricity transm
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) under HSN/SAC code – 9969. 6. RECORD OF PERSONAL HEARING 6.1. Shree Anil Kumar, Authorized Representative of the company appeared for personal hearing on 11.09.18 and reiterated the submission already made in the application 6.2. He submitted that applicant is a Company fully owned and aided by the Govt. of MP. The applicant is a power distribution utility under Electricity Act, 2003 and distributes power to the consumers in eastern part of the state of Madhya Pradesh. 6.3. It is governed by Electricity Act 2003 and directions of Madhya Pradesh Electricity Regulation Commission (MPERC) are binding on the company. The Madhya Pradesh Electricity Regulatory Authority (MPERC) is an Independent Authority fix rates of supply of power in the State of Madhya Pradesh. 6.4. The MPERC exercises the powers conferred by section 50 of the Electricity Act, 2003 for framing rules and regulations to frame Madhya Pradesh Electricity Supply Code,2013 same is reproduced under- The State Commission shall
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– 9.9 All categories of consumers committing default in the payment of the billed amount shall be liable to pay delayed payment surcharge, on the amount outstanding. al rates as per applicable retail supply tariff order. 6.7. The Delayed payment surcharge is a part of Tariff prescribed by MPERC. The Company is duty bound to charge rates as fixed by the Authority and nothing in addition, in any manner. The Delayed Payment Surcharge is billed to consumer when the bill is paid by the consumer after the due date mentioned in the bill. The Delayed Payment Surcharge may be mentioned in the bill as Surcharge on Outstanding Amount or Late Payment Surcharge. 6.8 EXEMPTION NOTIFICATION FOR TRANSMISSION AND DISTRIBUTION OF ELECTRICITY BY UTILITY- A. Electricity Transmission and Distribution Services – 1. Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 – As per Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 the activity of Transmission or distribution of elec
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ibution and retail supply activities in the commissionerates area of Jabalpur, Rewa and Sagar. Thus based on above facts, it is concluded that the applicant is covered in the definition of electricity transmission and distribution utility. 6.9 Notification No. 11/2017- Central Tax (Rate) dated 28th June, 2017 – As per Notification No. 11/2017- Central Tax (Rate) dated 28th June, 2017 at S.No. 13 the activity of electricity, gas, water and other distribution service is taxable and applicable rate of tax is (9% CGST & 9% SGST) – Sl.No. Service Code (Tariff) or SAC code Description of Services Rate (per cent.) Condition 13 Heading 9969 Electricity, gas, water and other distribution service. 9 Being general clause at S.No. 13 Notification No. 11/2017- Central Tax (Rate) dated 28th June, 2017 applicable in cases of electricity distribution services provided by the person other than electricity transmission and distribution utility. Since, the applicant is covered in the definition of el
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COMS against recovery of charges it had been clarified consumers under State Electricity Act are exempt from GST?. The clarification is as under – S.No. Issue Clarification 4 (1) Whether the activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are exempt from GST? (1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017- CT (R), Sl. No. 25. The other services such as, – i. Application fee for releasing connection of electricity; ii. Rental Charges against metering equipment; iii. Testing fee for meters/ transformers, capacitors etc.; iv. Labour charges from customers for shifting of meters or shifting of service lines; v. charges for duplicate bill; Provided by DISCOMS to consumer are taxable. Thus vide above circular it is clarified that the, not all the services of the DISCOMS are exempted. 7. ADVANCE RULLING ISSUED BY THE R
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r no. RAJ/AAR/02/2018-19, Dated – 18/10/2018 had changed the above ruling and provide ruling as under- Based on the available records, we rule that the no GST is chargeable on the delayed payment charges collected from the consumer for delay in payment of consideration for supply of electricity. Thus, the appellate authority had decided that the Delay Payment Charges is exempted as the value of main supply i.e., electricity is exempted. The ruling of Rajasthan authority of advance ruling, GST and the Rajasthan Appellate Authority for Advance Ruling, GST as mentioned above is relevant in the instant case as it is the common practice amongst the electricity distribution Companies to recover the delay payment charges from the consumers in case of delay in payment. Further, the nature of income in the case of applicant and TPADL is same. 8. DISCUSSION AND FINDINGS: The issue raised by the applicant and the material on record are discussed below- 8.1 Vide Notification No. 12/2017- Central T
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the bill is paid by the consumer after the due date mentioned in the bill. The Delayed Payment Surcharge may be mentioned in the bill as Surcharge on Outstanding Amount or Late Payment Surcharge. Thus the nature of the service is interest/ late fee/ penalty for delayed in payment of consideration. As per section 15 of CGST Act, 2017 and MPGST Act, 2017 the Value of Supply is as under – 15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if
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T it is clear that any amount recovered in the name of interest or late fee or penalty tor delayed payment of any consideration for any supply, than same shall be included in the value of such supply. We also observe that component of interest and delayed payment charges are obviously having a direct relation with the value of supply to which such interest/delayed charges relate. These are in fact components of the value of supply and do not have any independent status. Further, as mentioned above as per the ruling of Rajasthan Appellate Authority for Advance Ruling. GST the Delay Payment Charges is exempted as the value of main supply i.e., electricity is exempted. Attention is drawn towards fact the applicant is recovering delay payment charges not only towards supply of electrical energy as goods, supply Transmission/distribution of electricity service as an electricity distribution utility which are exempted, but also towards charges like metering charges and others which are taxab
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