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No GST is chargeable on the delayed payment charges collected from the consumers for delay in payment of consideration for supply of electricity.

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Appellate Authority for Advance Ruling —– Taxability on Non-Tariff Charges- Cheque Dishonour Charges –--The appellant entered into a Distribution Franchisee Agreement with Ajmer Vidyut Vitran Nigam Limited and has undertaken to supply Electricity. The appellants raise invoice on the customers for the consideration for supply of electricity. In addition to this, the appellants also recover some Non-tariff charges from the customer for certain specific activities. The various charges collected from the customer are such as application / connection fees, charges for equipment such as Meters, Transformers, etc., charges for extension of supply lines, cheque dishonour fees and delayed payment charges. The appellants sought an Advance Ruling as to whether the various Non-tariff charges recovered by them would be eligible for exemption under Sr. No. 25 of Notification No. 12/2017 - CTR. The AAR, in respect of the cheque dishonour fees, held that the said fee is a consideration for ‘tolerating an act’, which is supply in terms of Clause 5(e) of Schedule II to Act. In respect of the Delayed payment charges, the AAR held that the said charges are includible in the value of ‘supply’ and hence taxable and in respect of other non-tariff charges, the AAR relied on the Circular no. 34/08/2018-GST dated 1.3.2018 and held that such charges are leviable to GST.Aggrieved by the ruling, the appellants filed this appeal in respect of the ‘Cheque Dishonour Fees’ and ‘Delayed payment charges’.
Held that:- The Hon’ble Appellate Authority for Advance Ruling held no GST is chargeable on the delayed payment charges collected from the consumers for delay in payment of consideration for supply of electricity. While GST is chargeable on the cheque dishonor charges collected (by whatever name) from the consumers.—TP Ajmer Distribution Limited, In Re… [2018] 05 TAXLOK.COM 107 (AAAR-Rajasthan)

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