Case Law Details
Assam Electricity Regulatory Commission Vs Union Of India And 5 Ors (Gauhati High Court)
GST Demand on Electricity Regulatory Commission Quashed Because Quasi-Judicial Functions Are Not Taxable; Service Tax and GST Levy Invalid Because Regulatory Commission Functions Are Statutory in Nature; Electricity Regulatory Commission Fees Not Consideration for Taxable Supply; Gauhati HC Quashes GST Proceedings Because Electricity Commission Acts as Quasi-Judicial Body; GST Cannot Be Levied on Statutory Electricity Regulation Activities; Gauhati HC Sets Aside Tax Notices Because Regulatory Commission Functions Fall Under Schedule III Exclusion; Tax Authorities Lacked Jurisdiction to Levy GST on Electricity Commission Functions: Gauhati HC
The matter before the Gauhati High Court involved multiple writ petitions filed by the Assam Electricity Regulatory Commission challenging various demand notices, adjudication orders, and appellate orders issued under the Finance Act, 1994 and the Central Goods and Services Tax Act, 2017.
The petitions challenged: (i) Demand-cum-Show Cause Notices dated 28 April 2022 for the periods 2016–2017 and 2017–2018 along with adjudication orders passed under the Finance Act, 1994; (ii) the Final Adjudication Order dated 27 February 2023 under the CGST Act covering the periods from July 2017–2018 to 2022–2023; and (iii) the appellate order dated 13 February 2024 affirming levy of GST for those periods.
The central issue before the Court was whether the statutory and quasi-judicial functions discharged by an Electricity Regulatory Commission could be subjected to service tax or GST.
The petitioner argued that the issue was already settled through judgments of various High Courts, including the Delhi High Court decision in Central Electricity Regulatory Commission v. Additional Director, Directorate General of GST Intelligence (DGGI) dated 15 January 2025. In that case, the Delhi High Court held that regulatory functions performed by Electricity Regulatory Commissions, including tariff determination and licensing, are statutory functions and cannot be treated as activities undertaken in the course or furtherance of “business” under Sections 2(17) and 7 of the CGST Act, 2017.
The Delhi High Court had further held that fees collected for such regulatory activities do not amount to consideration for taxable supply. It also recognized the quasi-judicial character of the commissions and observed that their functions fall within the exclusion provided under Schedule III of the CGST Act relating to services rendered by courts and tribunals. The Delhi High Court additionally ruled that no artificial separation could be made between adjudicatory and regulatory functions and that attempts by the tax authorities to classify such functions as “support services” were legally unsustainable.
The Gauhati High Court noted that the aforesaid Delhi High Court judgment attained finality after dismissal of the Special Leave Petition by the Supreme Court on 21 July 2025 and dismissal of the review petition on 10 March 2026.
The Court also referred to consistent views taken by the Karnataka High Court in Karnataka Electricity Regulatory Commission v. Joint Commissioner, Central Tax, Bengaluru & Ors. and by the Himachal Pradesh High Court in Himachal Pradesh Electricity Regulatory Commission v. Union of India & Ors.
After considering these precedents, the Gauhati High Court summarized the legal position as follows:
- Electricity Regulatory Commissions are statutory bodies vested with regulatory and adjudicatory powers.
- Their functions are not in the nature of trade, commerce, or business.
- The element of “consideration” under Section 2(31) of the CGST Act is absent.
- Schedule III of the CGST Act expressly excludes services rendered by courts and tribunals.
- Any attempt to artificially segregate regulatory functions from adjudicatory functions is untenable.
The Court held that the Assam Electricity Regulatory Commission stood on identical footing with the commissions considered in the earlier judgments. Accordingly, it found that the assumption of jurisdiction by the tax authorities in issuing the impugned notices and orders was ex facie unsustainable.
Consequently, the Gauhati High Court set aside the Demand-cum-Show Cause Notices dated 28 April 2022, the adjudication orders passed pursuant to them, the Final Adjudication Order dated 27 February 2023, and the appellate order dated 13 February 2024. The writ petitions were accordingly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Ms. M L Gope, learned counsel appearing for the petitioner. Also heard Mr. S.C. Keyal, learned Senior Counsel/Standing Counsel assisted by Dr. B N Gogoi and Mr. K. Jain for the respondent Nos.2 to 6 (GST).
2. These writ petitions, namely W.P.(C) Nos. 4841/2022, 4842/2022, 4376/2023 and 3038/2024, involve a common issue and are, accordingly, taken up together for final disposal. The challenges raised in the respective writ petitions are as follows:
(i) In W.P.(C) No. 4841/2022, the petitioner challenges the Demand-cum-Show Cause Notice dated 28.04.2022 issued under the Finance Act, 1994 for the period 2016–2017, along with the adjudication order passed pursuant thereto;
(ii) In W.P.(C) No. 4842/2022, the petitioner challenges the Demand-cum-Show Cause Notice dated 28.04.2022 issued under the Finance Act, 1994 for the period 2017–2018, along with the adjudication order passed pursuant thereto;
(iii) In W.P.(C) No. 4376/2023, the petitioner challenges the Final Adjudication Order dated 27.02.2023 passed under the Central Goods and Services Tax Act, 2017 covering the periods July 2017–2018, 2018–2019, 2019–2020, 2020–2021, 2021–2022 and 2022–2023; and
(iv) In W.P.(C) No. 3038/2024, the petitioner challenges the appellate order dated 13.02.2024 passed by the Commissioner (Appeals), CGST, C.Ex. & Customs, Guwahati, affirming the levy under the Central Goods and Services Tax Act, 2017 for the aforesaid periods.
3. Since the issue arising in all the writ petitions is identical, they are being disposed of by this common judgment.
4. The impugned proceedings seek to subject the petitioner’s statutory regulatory commissions discharging quasi-judicial functions to levy of service tax/GST.
5. The core issue is whether the functions discharged by a statutory regulatory commission, being quasi-judicial in nature, are exigible to service tax/GST.
6. Learned counsel for the petitioners submits that the issue is no longer res integra and stands concluded by judicial pronouncements of various High Courts, affirmed by the Hon’ble Supreme Court.
7. The Delhi High Court, in Central Electricity Regulatory Commission v. Additional Director, Directorate General of GST Intelligence (DGGI) & Anr., in WP(C) No. 10680 of 2024 and C.M. Appl. No. 43919 of 2024 (Stay), by judgment dated 15.01.2025, held, allowing the writ petitions, that the regulatory functions discharged by the Electricity Regulatory Commissions, including tariff determination and licensing, are statutory in nature and cannot be construed as activities undertaken in the course or furtherance of ‘business’ within the meaning of section 2(17) read with section 7 of the Central Goods and Services Tax Act, 2017. The fees collected for such functions do not constitute consideration for a taxable supply. Further, having regard to the quasi-judicial character of the Commissions, their functions fall within the exclusion under Schedule III relating to services by courts and tribunals, and no artificial bifurcation between adjudicatory and regulatory functions is permissible. The attempt of the Department to classify such activities, as ‘support services’ cannot override the statutory exclusion. Consequently, the show-cause notices seeking to levy GST on regulatory fees having held unsustainable in law, the Delhi High Court set aside and quashed the same.
8. The aforesaid judgment has attained finality upon dismissal of SLP (Civil) Diary No. 32626/2025 on 21.07.2025, and the Review Petition (Civil) Diary No. 6956/2026 on 10.03.2026.
9. The Karnataka High Court, in Karnataka Electricity Regulatory Commission v. Joint Commissioner, Central Tax, Bengaluru & Ors. in (2026) 154 GSTR 472 (Karn), and the Himachal Pradesh High Court, in Himachal Pradesh Electricity Regulatory Commission v. Union of India & Ors. in MANU/HP/0056/2026, have taken a consistent view.
10. The legal position that emerges is:
(i) A regulatory commission is a statutory body vested with adjudicatory and regulatory functions;
(ii) Such functions are neither in the nature of trade, commerce, nor business;
(iii) The element of “consideration” as contemplated under Section 2(31) of the CGST Act is absent;
(iv) Schedule III expressly excludes services rendered by courts and tribunals; and
(v) Any attempt to artificially segregate regulatory and adjudicatory functions is untenable.
11. The petitioner herein, namely the Assam Electricity Regulatory Commission, stands on an identical footing as the commissions considered in the aforesaid judgments.
12. In view of the settled legal position, the assumption of jurisdiction by the respondents in issuing the impugned notices and orders is ex facie unsustainable.
13. Accordingly, the following are set aside:
(i) Demand-cum-Show Cause Notices dated 28.04.2022;
(ii) The adjudication orders passed pursuant thereto;
(iii) The Final Adjudication Order dated 27.02.2023; and
(iv) The appellate order dated 13.02.2024.
14. The writ petitions stand allowed and are disposed of in the above terms.
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