TMI Blog2019 (1) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 transmission or distribution of electricity utility' with respect to the Delay Payment Charges recovered by the applicant from its consumers. 4.2 If answer of Question no. 1 is negative then what will be the applicable rate of tax and HSN/SAC code for Delayed Payment Charges. 5. DEPARTMENT'S VIEW POINT - The concerned officer, The Joint Commissioner CGST and Central Excise Hqrs. jabalpur submitted that as per section 15(2)(d) of CGST Act, 2017 the value of supply shall include interest or late fees or penalty for delayed payment of any consideration for any supply. Further, as per the advance ruling authority order no. RAJ/AAR/2018-19/02, Dated 11/05/2018 = 2018 (6) TMI 1196 - AUTHORITY FOR ADVANCE RULING - RAJASTHAN passed by Rajasthan Authority of advance ruling, Goods and Services Tax, delay payment are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 electricity by an electricity transmission or distribution utility is NIL rate of GST- Sl.No. Service Code (Tariff) or SAC Code Description of Services Rate (per cent.) Condition 25 Heading 9969 Transmiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Notification No. 2/2017- Central Tax (Rate) dated 28th June, 2017 the electrical energy as a goods had been exempted from GST. Sl. No. Chapter/Heading/Sub-heading/Tariff item Description of Goods 104 27160000 Electrical Energy Thus based on the above facts, it is concluded that both the activity of distribution Transmission and retail supply of Electricity by the applicant is exempted. 6.11 CIRCULAR NO. 34/8/2018-GST, DATED- 01 st MARCH 2018 Vide Circular No. 34/8/2018-GST, Dated - 01 st March 2018, Clarification was issued under direction of fitment committee regarding GST in respect of certain services, where in whether the activities carried by DISCOMS 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Tax (Rate) dated 28th June, 2017 and corresponding notification issued under MPGST Act,2017 and Notification No. 2/2017- Central Tax (Rate) dated 28th June, 2017 and corresponding notification issued under MPGST Act, 2017 both the activity of distribution Transmission and retail supply of Electricity by the applicant is exempted. 8.2 Further, Vide Circular No. 34/8/2018-GST, Dated 01 st March 2018, it had been clarified that exemption granted under Notification No. 12/2017- Central Tax (Rate) dated 28 th June, 2017 and corresponding notification issued under MPGST Act,2017 is not exhaustive and some of the services that are provided by the DISCOMS are taxable under Goods and Services Tax. 8.3 Based on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 taxable as per Circular No. 34/8/2018-GST, Dated - 01 st March 2018. Thus, 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 ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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