18% GST Applicable on Cheque Bouncing Charges: AAR

AUTHORITY FOR ADVANCE RULING, TAMILNADU

The Question and GST Advance Rulings are as follows :

a. Whether the following activities will suffer GST or not

Main business activities:

a) Sale of water
b) Sewage treatment charges
c) Consultancy Services such as Detailed Project Report (DPR), Project Management Consultancy (PMC) and any other infrastructure related consultancy to TCMC / GoTN

Incidental to main business activities

d) Interest on receivable on delayed payments
e) Disconnection Charges
f) Reconnection charges
g) Permanent disconnection charges
h) Cheque Bouncing charges
i) Non-Revenue – Service provided to Customer on New Connection works- Concept of No Loss No Gain, New Connection Shifting and other works etc.

b. The company abstracts raw water from river Cauvery and supplies to users in potable condition, whether the water treatment process undertaken by the company would fall within the meaning of the word “purification”

c. Whether the GST Registration Certificate require amendment?

RULING

a. The applicant not being the class of persons specified in Notification No. 14/2017-C.T.(Rate) dated 28.06.2017 as amended, they are not eligible for the said Notification as discussed in Para 10.2 above.

b. The activity of Sewage offtake and treatment extended to Tirupur Municipal Corporation as per the CA is exempt under Sl.No.3 of Notification No.12/2017- C.T.(Rate) dated 28.06.2017 for the reasons discussed in Para 11.3 above.

c. The Consultancy Services rendered by the applicant to Tiruppur City Municipal Corporation in respect of the Project- Construction Management and Supervision Consulting Service to assist Project ULBs – Tiruppur City Municipal Corporation exempt under Sl.No.3 of Notification No.12/2017- C.T.(Rate) dated 28.06.2017 for the reasons discussed in Para 11.4 above.

d. In respect of the activities incidental to main business activities, it is rules as under :

i. Interest on receivable on delayed payments being charges received for ‘Agreeing to tolerate an act’ classifiable under SAC 999794 is taxable@ 9% CGST and 9% SGST as per S1.No. 35 of Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 read with .. Sl.No. ·_ 35 .. Qf, _Notification No. II (2)/CTR/532(d-14)/2017 vide G.O. (Ms.)No.72 dated 29.06.2017 as amended for the reasons discussed in Para 13. l(a) above.

ii. Cheque Bouncing Charges being charges received for ‘Agreeing to tolerate an act’ classifiable under SAC 999794 is taxable @, 9% CGST and 9% SGST as per Sl.No. 35 of Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 readwith SI.No. 35 of Notification No. II (2)/CTR/532(d-14)/2017 vide G.O. (Ms.)No. 72 dated 29.06.2017 as amended for the reasons discussed in Para 13. l(b) above.

iii. New connection works executed as per CA for TCMC , the established asset is accounted as their assets are not taxable being self-service for the reasons discussed in para 13. l(c) above.

iv. Connection/ Reconnection/ Disconnection/ Permanent Disconnection Charges are charges received for the services of ‘Water Distribution Services’ classifiable under SAC 9969 and is taxable @ 9% CGST and 9% SGST as per Sl.No. 13 of Notification No. 11/2017- C.T.(Rate) dated 28.06.2017 readwith Sl.No. 13 of Notification No. II (2)/CTR/532(d- 14)/2017 vide G.O. (Ms.)No.72 dated 29.06.2017 as amended for the reasons discussed in Para 13.1 (d) above.

But as regard to the activity of ‘supply of Water-goods’ by the applicant to the purchasers as per the CA, we have different views on this aspect as discussed in Para 12.2 supra. Since we have different views on this particular issue, we are making a reference to the Appellate Authority for hearing and decision on this issue in terms of Section 98(5) of the Act ibid which provide that where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question.