18% GST on Cheque Bouncing Charges, Interest on receivable on delayed payments, Connection/ Reconnection/ Disconnection/ Charges, rules AAR [Read Order]

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that 18% GST is applicable on Cheque Bouncing Charges, Interest on receivable on delayed payments, Connection/ Reconnection/ Disconnection/ Charges.

The applicant, M/S. New Tirupur Area Development Corporation Limited  is a public limited company, promoted by TN Government, Tamilnadu Water Investment Company Limited (TWIC), and ILFS Ltd, is registered under the GST Act 2017.

The applicant has sought the advance ruling on the issue Whether GST is applicable on Sale of water, Sewage treatment charges and Consultancy Services such Detailed Project Report (DPR), Project Management Consultancy (PMC) and any other infrastructure related consultancy to TCMC / GoTN.

The other issue raised was whether GST is applicable on the incidental activities such as Interest on receivable on delayed payments, Disconnection Charges, Reconnection charges, and Permanent disconnection charges and Cheque Bouncing charges.

The coram of Thiru Kurinji Selvaan and Senthilvelavan B. ruled that the activity of Sewage offtake and treatment extended to Tirupur Municipal Corporation as per the CA is exempt under SI.No.3 of Notification No.12/2017- C.T.(Rate) dated 28.06.2017.

“The Consultancy Services rendered by the applicant to Tirupur City Municipal Corporation in respect of the Project- Construction Management and Supervision Consulting Service to assist Project ULBs- Tirupur City Municipal Corporation exempt under SI.No.3 of Notification No. 12/2017- C.T.(Rate) dated 28.06.2017,” the AAR ruled.

The AAR while ruling in respect of the activities incidental to main business activities said that 18% GST is applicable on Interest on receivable on delayed payments being charges received for ‘Agreeing to tolerate an act’; Cheque Bouncing Charges being charges received for ‘Agreeing to tolerate an act’ and Connection/ Reconnection/ Disconnection/ Permanent Disconnection Charges are charges received for the services of ‘Water Distribution Services’ respectively.

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