IN RE : M/s TP AJMER DISTRIBUTION LIMITED
GST
2018 (6) TMI 1196 – AUTHORITY FOR ADVANCE RULING – RAJASTHAN – 2018 (14) G. S. T. L. 309 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING – RAJASTHAN – AAR
Dated:- 11-5-2018
ADVANCE RULING NO. RAJ/AAR/2018-19/02
GST
Nitin Wapa, Member and Sudhir Sharma, Member
Present for the Applicant – Shri Varun Sharma, FCA, Authorised Representative
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,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
transfer to a new location or transfer of name
Charges to be recovered for releasing temporary Connections
Charges are recovered for releasing of temporary connections. The charges include advance against electricity consumption, security and application fees and service line charges.
Charges for duplicate bill
In case of duplicate bill required by consumer, charges are recovered
Additional amount to be deposited on 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Transformers Testing Fees
In certain cases a fee is charged for testing of transformers
Capacitor Units Testing Fees
Capacitor unit is equipment used to maintain the power factor of electrical installation. This fee is taken to ensure that the capacitor units are maintaining the power factor as per norms given by the regulator “Power Factor” shall mean the monthly average power factor determined as the ratio of total Watt Hours to corresponding
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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gime, as per Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017, exemption from levy of GST has been granted to the activity of Transmission or distribution of electricity by an electricity transmission or distribution utility. Corresponding notifications have also been issued under the IGST Act and SGST Act – Notification No. 9/2017 – Integrated Tax (Rate) dated 28.06.2017 and SGST-No. F 17(131) ACCT/GST/2017/6822 dated 29.06.2017
(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 recov
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
outside the ambit of 'Supply'.
3.3 It is further pertinent to note that intra-state and inter-state supplies of electrical energy which is classifiable under Chapter Heading 2716 00 00 of the Customs Tariff Act. 1975 is exempt (NIL rate of tax) vide Notification No. 2/2017 – Central Tax (Rate) dated 28.06.2017 and Notification No. 2/2017 – Integrated Tax (Rate) dated 28.06.2017, respectively.
3.4 Further, services by way of transmission or distribution 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gned to it in clause (67) of section 2 of the Electricity Act, 2003 (36 of 2003);
4. The applicant has also submitted that,
4.1 From the provisions of the CGST Act mentioned above in Para 2, the service of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt under Exemption Notification. As per the said Exemption Notification, the benefit of the exemption can be availed only when 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'. Ac
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ertain activities like installation, repair and maintenance of meter, electric lines/plant and other related activities. The detailed list of activities undertaken by TPADL are enumerated under para 3 above. The expenses incurred by TPADL for providing the aforesaid services are as a part and parcel of the activity of distribution of electricity as TPADL has to incur these expenses in order to provide the service of distribution of electricity.
(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 ligh
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
2017 GST. (Notification No.9/2017 Integrated Tax (Rate) dated 28.06.2017 and SGST No. F12 (56)FD/Tax/2017-Pt-I-50 dated 29.06.2017)
” Transmission or distribution of electricity by an electricity transmission or distribution utility” is EXEMPTED
Further as per the definitions given under notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 in respective paras,
(z) “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;
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 transmiss
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
service lines
v. charges for duplicate bill;
provided by DISCOMS to consumer are taxable.
7.3 REFUNDABLE SECURITY DEPOSITS –
As per Section 2 (31) of the CGST Act, 2017
“consideration” in relation to the supply of goods or services or both includes-
(a) any payment made or to be made, whether in money or otherwise, 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:
(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 sup
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
yment of any consideration for any supply;
Hence taxable.
7.7 The Jurisdictional officer in his comments has also stated that GST is liveable on all nontariff charges for services not directly related to transmission or distribution of electricity and has opined that there no such exemption under the GST Act, hence are taxable . He has further given reference of the clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018 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 ut
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =