Case Law Details
In re Punjab State Power Corporation Limited (GST AAR Punjab)
1. Introduction: The recent case of Punjab State Power Corporation Limited (PSPCL) seeking an Advance Ruling from the GST AAR Punjab on the taxability of the prepayment premium charged by Power Finance Corporation Limited (PFC), New Delhi, sheds light on a complex issue in the realm of Goods and Services Tax (GST) under the CGST Act, 2017.
2. Brief Facts of the Case: PSPCL, a Punjab Government undertaking involved in electricity generation, transmission, and distribution, availed a working capital term loan of Rs. 2000 Crore from PFC during the Financial Year 2015-16. Deciding to prepay the loan due to a higher interest rate, PFC raised a demand for a prepayment premium of Rs. 16,85,71,429, inclusive of GST at 18%. PSPCL sought an Advance Ruling to determine whether this prepayment premium is taxable under the CGST Act, 2017.
3. Questions on Which Advance Ruling is Sought: The primary question before the AAR Punjab was: Whether the prepayment premium charged by PFC for the prepayment of loans is taxable under the GST Act, 2017?
4. Eligibility of the Application for Advance Ruling: The application falls under the ambit of Section 97(2) of the CGST Act, 2017, and is eligible for a ruling by the Punjab State Advance Ruling Authority.
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