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2019 (1) TMI 418 - AAR - GSTLevy 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. As per the provision of Section 15(2)(d) of CGST Act, 2017 and MPGST 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 - the 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. 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 taxable as per Circular No. 34/8/2018-GST, Dated - 01st March 2018 - in the instant case the supply in question is set of both, exempted (i.e., distribution & Transmission, retail supply of Electricity) and taxable supply (i.e., the other services as per circular no. 34/8/2018- GST, dated - 01st March, 2018). 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. 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.
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