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2024 (3) TMI 672 - AAR - GSTLevy of GST - various charges collected along with network/wheeling charges, cross subsidy surcharge and additional charges - these are charges for distribution of electricity and collected in connection with supply of electricity - HELD THAT:- TANGEDCO, the Applicant, is a distribution licensee in terms of section 14 read with section 131 of the Electricity Act, 2003 and they are authorized to operate and maintain distribution system for supplying electricity to the consumers. Thus they are undoubtedly 'Electricity transmission or distribution utility' and the transmission or distribution of electricity services provided by them is exempt from GST as per the Notification No. 12/2017-CT(Rate) dated 28.06.2017. The service provided by the Applicant to the users as 'wheeling/network charges' are only for providing the service of transmission of electricity and hence charges collected form the part of consideration for the same single service. Further it is seen that the charges are on the basis of the energy input to the system. Hence the wheeling/network charges collected is for the service of transmission of electricity and hence covered under the exemption stated in the notification - there are force in the Applicant's contention regarding charges collected for dishonoured cheque and belated payment. Based on the Board's Circular No. 178/10/2022-GST dated 03.08.2022, the charges collected for dishonoured cheque are not taxable and charges collected for belated payments are naturally bundled with the main supply, i.e. transmission of electricity, which is exempted and thereby these charges are also exempted. The following charges collected for the services rendered by the Applicant are directly or closely related to transmission or distribution of electricity and therefore we hold that these charges will be completely exempted as per Notification No. 12/2017-CT(Rate) dated 28.06.2017: Belated payment surcharge (BPSC), Dishonoured cheque service charge and Network/wheeling charges - the Applicant is bringing the entire gamut of services under composite supply. As per GST law, whether a supply consisting of two or more goods or services or both, is composite supply or not is given under Section 8 of CGST Act, 2017. For a supply to be considered as a composite supply, it constituent supplies should be so integrated with each other that one is not supplied in ordinary course of business without or independent of other. In other words, they are naturally bundled, and if supply of one service is removed, then the nature of service will be affected. It is found that not all services rendered by the Applicant for which they charge, are naturally bundled with the main service i.e. transmission or distribution of electricity. The services are not naturally bundled with the principal supply i.e. transmission/distribution of electricity. The main supply may take place without above ancillary charges. The provision of service such as consumer meter card replacement charge, excess contracted load charges, Temporary disconnection charges at the request of the consumer etc. are infrequent, need based and provided upon specific request of the consumer at a cost which is independent of the cost for service of the main supply. The main supply, i.e. supply of electricity is not affected even if any of the services above are not rendered - the services are not composite supply and thereby charges for the services will be taxed at the appropriate prevailing rate, i.e. 18% GST (CGST 9% & SGST 9%) as per Notification 11/2017-CT(Rate) dated 28.06.2017.
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