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2018 (6) TMI 1196 - AAR - GSTLevy of GST - Transmission or distribution of electricity by an electricity transmission or distribution utility - Whether TPADL is eligible to avail the exemption from 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 utility with respect to the non-tariff charges recovered by TPADL from its customers? - Whether TPADL is liable to pay tax on the aforesaid recovery made from its customer? Held that - M/s TPADL is covered under electricity transmission or distribution utility and Transmission or distribution of electricity by an electricity transmission or distribution utility is EXEMPTED. As regard the other services provided by M/s TPADL it is clarified by the Department under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018 - In view of the clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018. it is found that M/s TPADL is not eligible to avail the exemption from 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 utility with respect to the non-tariff charges recovered from their customers and is liable to pay tax on the aforesaid made from its customer. Ruling - The Services provided by M/s TPADL with respect to the non-tariff charges recovered from their customers are not eligible for exemption and M/s TPADL is liable to pay tax on the aforesaid recovery made from their customers.
Issues Involved:
1. Eligibility of TPADL for GST exemption under Entry No. 25 of Notification 12/2017 for non-tariff charges. 2. Liability of TPADL to pay tax on the recovery made from its customers. Issue-wise Detailed Analysis: 1. Eligibility of TPADL for GST Exemption: Applicant's Submission: - TPADL, a Special Purpose Vehicle formed by TPCL, operates under a Distribution Franchisee Agreement with AVVNL to distribute electricity in Ajmer. - TPADL recovers various non-tariff charges from customers, which are regulated by the Rajasthan Electricity Regulatory Commission (RERC). - Under Entry No. 25 of Notification 12/2017 - Central Tax (Rate) dated 28.06.2017, transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST. - TPADL argues that it qualifies as an electricity transmission or distribution utility and that the non-tariff charges are part of the distribution activity, thus should be exempt from GST. Authority's Findings: - As per Notification 12/2017, "Transmission or distribution of electricity by an electricity transmission or distribution utility" is exempt from GST. - TPADL qualifies as an electricity transmission or distribution utility. - However, the exemption applies only to the service of transmission or distribution of electricity. - Circular No. 34/8/2018-GST clarifies that other services such as application fees, rental charges for metering equipment, testing fees, labor charges for shifting meters, and charges for duplicate bills are taxable. - Refundable security deposits are not considered as consideration for the supply unless applied as such. - Cheque dishonor fees and delayed payment charges are considered as taxable supplies of services. 2. Liability of TPADL to Pay Tax on Recovery: Applicant's Submission: - TPADL claims that the non-tariff charges are part and parcel of the distribution of electricity and should be exempt under the same notification. - They argue that specific charges like security deposits, cheque dishonor fees, and delayed payment charges should not be taxable as they are not part of the consideration for the supply of electricity. Authority's Findings: - The authority referred to Circular No. 34/8/2018-GST, which states that additional services provided by DISCOMs are taxable. - Refundable security deposits are not taxable unless applied as consideration. - Cheque dishonor fees are taxable as they fall under the category of services for tolerating an act. - Delayed payment charges are taxable as they are considered interest or late fees for delayed payment of any consideration for any supply. - The jurisdictional officer also confirmed that non-tariff charges for services not directly related to the transmission or distribution of electricity are taxable. Conclusion: - TPADL is not eligible for GST exemption on non-tariff charges under Entry No. 25 of Notification 12/2017. - TPADL is liable to pay tax on the recovery made from its customers for the non-tariff charges. Ruling: - The services provided by TPADL with respect to the non-tariff charges recovered from their customers are not eligible for exemption. - TPADL is liable to pay tax on the aforesaid recovery made from their customers.
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