"4Meaning: if the customer pays the bill within 10 days of invoice date (some use receiptdate), then the customer can deduct 2 percent of the value of the bill (usuallyexcluding freight as part of the discount). Otherwise the invoice amount is due in full30 days from invoice date or receipt date, after which interest charges may be applied.So, the invoice value differs in both the cases.Case 1:98% of the value will be the value charged for considerationCase 2: 100% of the value will be the value charged for considerationSo, depending on the payment pattern, different value can be charged for the sameservice (viz Rs. 98 in case 1 and Rs. 100 in Case 2 )1.7 Inference drawn from the aforesaid illustration can be clearly linked to the facts andcircumstances in our case. Therefore, the interest charged for deferment will betermed as value charged for consideration only taking into account the time value ofmoney and other similar factors.SUBMISSIONSThe Noticee denies the allegations made in the SCN on the following ground whichare independent and without prejudice to each other. Earlier, we have submittedth th th reply vide our letter dated 5 October, 2015, 4 November, 2015, 4 March, 2016,th rd 27 April, 2016 and 23 May, 2016. In continuity of the aforesaid replies, we wouldlike to submit following information and documents:1.Interest charged to be the part of Consideration and therefore, a statutory levynot chargeable 51.1 IIn the earlierletters enquired, Audit team alleged that LLP has not paid service taxon EDC/IDC charges recovered from the customer. In this regard it has already been submitted that External Development Charges(EDC) and infrastructure development charges (IDC) are levied by the Departmentof Town & Country Planning, Haryana (DTCP). These charges include developmentcharges for water supply, sewerage, storm water drainage, roads, street lighting,community buildings, horticulture, public health, road maintenance, and streetlighting maintenance etc.1.2 Since these charges are in the nature of service provided by the builder to the buyer ofthe property over and above the construction service, such charges are being broughtunder the new service. Charges for providing parking space have been specificallyexcluded from the scope of this service. Development charges, to the extent they arepaid to State Government or local bodies, will beexcluded from the taxable valuelevy.The aforesaid explanation has been consented upon and there is no furtherconflict on this issue.In light of the above, it can be said that EDC/IDC charges is a statutory fee which isbeing paid to a government body for providing a sovereign function and there is noprovision of service as such. Builder is merely acting as an agent thus value to theextent of what is paid to the government were kept outside the ambit of service tax.1.3 This consideration termed as statutory levy has to be discharged as per the paymentplan prescribed by the government. So, in order to provide convenience to thebuilder, DTCP provides option to the builder to pay EDC/IDC in instalment along 6with the interest which is imposed as per the laws and bye laws of the stategovernment.The payment plan has been detailed hereunder:“As per the licenses issued by the DTCP to the LLP it was very clearly mentioned thatthe EDC and IDC charges need to be deposited with the government either on lump- sum basis i.e. all payment made within 30 days of the grant of license or in ten (sixmonthly) instalments along with the interest @12% p.a.”1.4 The payment plan further leads us to the question regarding taxability on theinterest being charged on the deferred payment as per the terms and conditionslevied by the government.1.5 Defending the portion of interest, the contention has already been submitted to youcontending that interest payable to Government in lieu of deferment of payment ofservice shall not be excluded from value of service meaning thereby interest portionpaid to Government for deferment of payment will form part of value of service.Therefore, the interest portion would also be the part of the statutory fee, meaningthereby, not chargeable to service tax. The legal support for the interest charged tobe part of the consideration has been discussed forthwith.1.6 As per rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 whichprovide for exclusion of interest on delayed payment from the value of any taxableservice. Thus, generally interest on delayed payment is kept separate from value ofservice. "