2018 (6) TMI 1196 – AUTHORITY FOR ADVANCE RULING – RAJASTHAN – 2018 (14) G. S. T. L. 309 (A. A. R. – GST) – Levy of GST – Transmission or distribution of electricity by an electricity transmission or distribution utility – Whether TPADL is eligible to avail the exemption from levy of GST under Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017 bearing description 'Transmission or distribution of electricity by an electricity transmission or distribution utility' with respect to the non-tariff charges recovered by TPADL from its customers? – Whether TPADL is liable to pay tax on the aforesaid recovery made from its customer?
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Held that:- M/s TPADL is covered under electricity transmission or distribution utility and Transmission or distribution of electricity by an electricity transmission or distribution utility is EXEMPTED.
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As regard the other services provided by M/s TPADL, it is clarified by the Department under Circular no. 34/8/2018-GST dated 01
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ative RULING (A) SUBMISSION OF APPLICANT 1. M/s TP Ajmer Distribution Limited ('TPADL' or 'Applicant' or 'the Company ); having Goods and Services Tax ( GST') Registration No. 08AAGCT2158P1ZR and is engaged in the business of distribution of electricity; has submitted that, 1.1 The Tata Power Company Limited ('TPCL') has signed a Distribution Franchisee Agreement ('DFA') with Ajmer Vidyut Vitran Nigam Limited ('AVVNL') to cater to the power requirements of customers in Ajmer, Rajasthan for a period of 20 years. To serve the aforesaid purpose, TPCL has formed a Special Purpose Vehicle ('SPV') called TPADL, which will be responsible for operating and maintaining the distribution network in Ajmer City. It will also be responsible for managing the billing and collections in the said areas. 1.2 They are engaged in the activity of distribution of electricity. For the aforesaid service, distribution charges are recovered from the custome
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demand for extension of distribution mains/SuppIy line This amount is collected for extension of the distribution mains/ supply lines. There is certain amount of material which is used in the present case. Security Deposits for Electricity Consumption This is a refundable security deposit w'hich is collected from the consumers Security Deposits against Meters This is a refundable security deposit for the meter installed at the customer's premises Rent for metering equipment Rent is collected for metering equipment for industrial consumers Meter Testing Fees In case a consumer complains about a defect on the meter, a fee is collected for testing the meter ABT compliant meter ABT means Availability Based Tariff Meters. This is fee for ensuring compliance as per the regulatory norms Change of meter In case of a change in the meter, charges are recovered from the consumer Labour charges for shifting of meter in the same premises In case there is a shifting of the meter for any reas
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rresponding Volt Ampere Hours. Fee charged for testing of consumer's installation These charges are recovered for any addition/ alternation on consumer installation. Installation shall mean the whole of the electric wires, fittings, motors and apparatus erected and wired by or on behalf of the consumer, on his premises. Charges for alteration/shifting of service line In case of shifting of the service line from the pole to the home, charges for alteration/ shifting are recovered. Such charges may also be recovered in case of shifting of lines within the premises. Moreover, if there is pole near the consumer's home, the consumer may want the same to be shifted on account of safety issues or any alteration or extension of his house. Cheque dishonour fee In case the cheque given by the consumer is dishonoured, charges are recovered Delayed payment Charges In case of delay in payment by the consumers of the electricity bill, delay payment charges is collected from the consumers 1.3
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6.2017 (B) ISSUE FOR DETERMINATION The question/ issue before the authority of advance Ruling (AAR) for determination are: a. Whether TPADL is eligible to avail the exemption from levy of GST under Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017 bearing description 'Transmission or distribution of electricity by an electricity transmission or distribution utility' with respect to the non-tariff charges recovered by TPADL from its customers? b. Whether TPADL is liable to pay tax on the aforesaid recovery made from its customer? (C) SUBMISSION BY THE APPLICANT 3 The applicant has submitted the following provisions of GST in their support, 3.1 In accordance with Section 9 of the Central Goods and Services Tax Act, 2017 ('CGST Act') and Section 5 of the IGST Act, which provides for charging of GST, GST is levied at the rate prescribed on all intra-state and inter-state supplies of goods/ services. 3.2 As per Section 7 (1) of the CGST Act, 'Sup
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of electricity by an electricity transmission or distribution utility have been exempted vide the Exemption Notification. The relevant extract of the Exemption Notification is reproduced hereunder: ''Transmission or distribution of electricity by an electricity transmission or distribution utility " 3.5 Serial No. 2(z) of the Exemption Notification defines electricity transmission or distribution utility as under: "electricity transmission or distribution utility" means the Central Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act, 2003 (36 of 2003); or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government ". 3.6 Further, some of the relevant terms as defined under the Exemption Notification are provided below: Serial No. 2(q) – "
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the below mentioned conditions are satisfied: a) The service shall be the service of transmission or distribution of electricity, and b) The said service shall be provided by an electricity transmission or distribution utility. 4.2 In the present case, TPADL is regarded as a franchisee since it has entered into a DFA with AVVNL being distribution licensee under the Electricity Act, 2003 ('Electricity Act). Therefore, TPADL would clearly fall within the ambit of definition of the term 'electricity transmission or distribution utility'. Accordingly, the condition (b) is satisfied in the present case. 4.3 With respect condition (a), it is submitted that the said Exemption Notification does not define the terms 'transmission or distribution of electricity'. Accordingly, it is pertinent to analyse whether the non-tariff charges collected by TPADL would be treated as consideration for the activity of 'transmission and distribution of electricity' and thereby cover
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. (D) Personal Hearing (PH) 5. In the matter personal hearing was given to applicant. Shri Varun Sharma, FCA , appeared as Authorised Representative of applicant for personal hearing on 05.05.2018. During the PH he reiterated the submission already made in application submitted on 12.02.2018 . Further during personal hearing the clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018 was brought to the applicant's notice and issues raised in application for Advance Ruling were discussed in light of the provisions of clarification in detail . He argued that issues relating to Security deposits against electricity consumption and meters, cheque dishonour fees and delayed payment charges are not part of the considerations for the supplies hence non taxable. He further requested that the case may be decided at earliest on the basis of submission already made. (E) Issues to be decided: 6. The issue involved in this case is, (a) Whether TPADL
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al Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act, 2003 (36 of 2003); or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government; Therefore, in terms of above definition. M/s TPADL is covered under electricity transmission or distribution utility and Transmission or distribution of electricity by an electricity transmission or distribution utility is EXEMPTED. 7.2 Further as regard the other services (mentioned in para 1.2 above) provided by M/s TPADL, it is clarified by the Department under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018, In the said circular Clarifications regarding GST in respect of certain services has been given and at Sr. No. 4 clarification on the issue; Whether the activities carried by DISCOMS against recovery
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other person but shall not include any subsidy given by the Central Government or a State Government: (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply ; Therefore, the refundable security deposit against Electric Consumption and Electric Meter, which are collected from customers, will not be treated as consideration for the supply. Only when the security deposits are applied as consideration (such as forfeiture, offsetting against future progress payment, etc.) does it becomes taxable. 7.4 CHEQUE DISHONOUR FEE – As per clause 5 (e) schedul
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18 which states that other services provided by DISCOM to consumer are taxable. 7.8 Therefore, in view of the clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018. and as discussed in above paras, it is found that, M/s TPADL is not eligible to avail the exemption from levy of GST under Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017 bearing description 'Transmission or distribution of electricity by an electricity transmission or distribution utility' with respect to the non-tariff charges recovered from their customers and is liable to pay tax on the aforesaid made from its customer. 8. In view of the forgoing, we rule as under, RULING In light of clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018-TRU and provisions of GST Act , The Services (as mentioned in para 1.2 above) provided by M/s TPADL with respect to the non-tariff charges recovered from the
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