You should be clear about the concept. Then you may use both the logic and result will be same.
if someone is found to use the power in wrong/higher tariff. He should be penalized.
So, simply try to calculate the electricity bill of that higher tariff like a genuine consumer. Since we need to penalize him, double the rate. So, electricity charges will be calculated by considering the double rate.

Now, if you are using the first logic.
1. Means, you have subtracted the lower tariff bill. Then, he has to pay both, his existing tariff's bill and penality. And any payment made between the assessment period will also be considered as assessment payment. His lower tariff bill will not be cancelled.

With the second logic.
2. Means, you have subtracted the payment only. Then, his existing bill will be cancelled. He need not to pay the electricity bill of that assessment period.

Try to understand it by a simple example.

Checking were done on 25-jan-2020.
His existing tariff is LMV1 but using supply in LMV2.

You are trying to generate his assessment from 25-jan-2019 to 25-jan-2020.
Suppose his arrear till 25-jan-2019 = 10000.
Bill from 25-jan-19 to 25-jan-2020 = 5000 and made a payment of 2000 in between.
So, his existing bill upto date = 10000+5000-2000=13000.
Now, you have made a bill of LMV2 with double rate of that period as 15000.

With the first logic,
1. You will raise his assessment = 15000-5000 = 10000.
His existing bill of last one year = 5000-2000= 3000.
He has to pay
Arrear + assessment + bill = 10000+10000+3000= 23000.

With the second logic,
2. You will raise his assessment = 15000-2000= 13000.
He has to pay
Arrear + assessment = 10000+13000= 23000.

You may answer him that a Fixed charge is payable to the agreement consumer. Since he is an agreement consumer, fixed charges are payable.

The fixed charge is not chargeable in case of direct theft as offender is not our agreement consumer.

One question sir ki Kay bill bnate time fixed charge bhi double charge krna hoga .ex 100 unit 126 commercial use m 12 month ka 1 kW.
Fc 300(now 330 suppose)*12*2
Ya 300*12only
Because double tariff rate p ye aata ki nhi sir

Sir hmare yha lmv 9 k case m  135act m agr consumer khud ka bhawan Norman krwata (domestic)to compounding fee domestic wali lete.jaise current m 2000 before 4000 .to ye shi hai sir

135A me fixed charge nahi lenge. banki sabhi me fixed charge lena hai