In re indian Oil Corporation Ltd. (GST AAR Uttar Pradesh)
Que- (i) Whether the services supplied by UPPTCL to the Applicant are exempt from payment of GST under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?
Ans- (i)- The application is not admitted, under Section 98(2) read with Section 95(a) of CGST Act, 2017/UPGST Act, 2017 for the reason that the applicant has raised questions as a recipient of service
Que-(ii)-Subject to above, whether the Applicant is eligible to claim Input Tax Credit(ITC) of the tax paid on services received from UPPTCL?
Ans-(ii)- Not answered as question 1 is not admitted.
Que-(iii)-Subject to above, whether the Applicant is liable to deduct Tax at Source(TDS) on the amount paid to UPPTCL for services supplied by it?
Ans-(iii)-Not answered as question I is not admitted.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, UTTAR PRADESH
ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 & UNDER SECTION 98 (4) OF THE UPGST ACT, 2017
1. M/s IINDIAN OIL CORPORATION LTD, TC 39-V, INDIAN OIL BHAWAN, Vibhuti Khand, Gomti Nagar, Lucknow-226010 (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAACI1681G1ZN.
2. The applicant has submitted as under-
i. The Applicant is a company registered in India and is, inter-alia, a government owned oil and gas corporation under the Ministry of Petroleum and Natural Gas. The Applicant has a refinery at Mathura.
ii. The Applicant is, inter-alia, manufacturing and supplying goods, on which appropriate GST is charged and paid. Such goods involve Naphtha having HSN 271012, SKO and Furnace Oil having HSN 271019,
iii. Currently, M/s. Dakshinanchal Vidyut Vitran Nigam Limited, Agra (`DVVNL’) is the licensed electricity distribution company in the area of IOCL Mathura and hence, supplying the electricity to it through grid at 220KV Voltage level.
iv. The Applicant applied for 72MW bulk power at 220KV voltage level vide letter dated 28.11.2017 to DVVNL, which was sanctioned vide letter dated 14.06.2018 from two different sources i.e. Math, Mathura and Pili Pokhar, Agra. It was informed that the demand would be fulfilled by erecting one 220/33 KV transmission line, 3*60 mvA GIS substation, double circuit line and two bays.
v. Transmission function within the state of Uttar Pradesh is undertaken by M/s Uttar Pradesh Power Transmission Corporation Limited (for short `UPPTCL’), incorporated in 2006, which is notified as the State Transmission Utility of Uttar Pradesh, vide Notification No. 122/U.N.N.P./24-07 dated 18.07.2007.
vi. For an uninterrupted power supply at desired voltage sanctioned by DVVNL, it is required to have a transmission line and hybrid bay erected, before the supply of power at desired voltage level.
vii. The entire work is divided into two parts:
1. InSide Battery Limit (ISBL): It is carried out by the Applicant itself.
2. OutSide battery Limit (OSBL): It includes construction of transmission towers, transmission line and hybrid bay, which will be undertaken by UPPTCL. For executing this work, UPPTCL will collect the actual costs from the Applicant. Apart from this, UPPTCL will also issue NOC for connecting of ISBL part with its grid by the Applicant, for which supervision of UPPTCL is required and supervision charges are also collected by UPPTCL from the Applicant. The said works shall be carried out on deposit works basis.
viii. The ownership of transmission infrastructure developed by UPPTCL remains with UPPTCL and is reflected as fixed assets in the books of UPPTCL. The exclusive rights to operate, manage and maintain the infrastructure shall rest with UPPTCL.
ix. The contribution received from the Applicant under the deposit work is reflected
separately as financial assistance by UPPTCL in its books of accounts and the interest earned on it or the depreciation claimed on the fixed assets is not taken into consideration for computation of transmission charges by UPPTCL.
3. The applicant has sought advance ruling on following questions as per Form GST ARA-01 –
1. Whether the services supplied by UPPTCL to the Applicant are exempt from payment of GST under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017?
2. Subject to above, whether the Applicant is eligible to claim Input Tax Credit (ITC) of the tax paid on services received from UPPTCL?
3. Subject to above, whether the Applicant is liable to deduct Tax at Source (TDS) on the amount paid to UPPTCL for services supplied by it?
4. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
5. The applicant have submitted their interpretation of law as under-
(i) Section 97(2)(d) of the UPGST Act provides that the question, on which the advance ruling is sought under this Act, shall be in respect of admissibility of ITC of tax paid or deemed to have been paid. Section 97(2) uses the phrase ‘in respect of. In other words, the questions for advance ruling need not be on the aspects covered under sub-clauses of Section 97(2), but can also be a question relating to such aspects. Reliance is placed on decision of Hon’ble Supreme Court in Union of India v. Vijay Chand Jain, AIR 1977 SC 1302, wherein it was held that the phrase ‘in respect of’ admits of a wide connotation and is used in the sense of being ‘connected with’.
(ii) It needs to be determined whether the services supplied by UPPTCL to the Applicant are exempt from payment of tax, in order to determine the eligibility of the Applicant to avail ITC of tax paid thereon, if any. Such question is specifically covered under Section 97(2)(d) of the UPGST Act and thus, an application seeking advance ruling on such question is maintainable.
(iii) the Applicant and UPPTCL both are PSUs and the liability to deduct TDS under Section 51 arises only on payments made for taxable services. In such a case, thus, the liability of the Applicant to deduct TDS on payments made to UPPTCL can be determined, only if the GST is payable on the supplies made by UPPTCL. The question is specifically covered under Section 97(2)(b) of the UPGST Act, being in respect of applicability of Notification No. 50/2018-Central Tax dated 13.09.2018, which effectuates provisions of Section 51.
(iv) Section 97(2)(e) covers the aspect of determination of the liability to pay tax on any goods or services or both. Since the Applicant is the recipient of the subject services from UPPTCL, the question of availability of exemption to supply of such services is also covered under Section 97(2)(e).
(v) The decision of the Advance Ruling Authority is given to an applicant, in relation to supply of goods or services or both. The phrase ‘in relation to’ is a very wide expression and is used in an expansive sense. In this regard, reliance is placed on decision of Hon’ble Supreme Court in Doypack Systems (Pvt) Limited v. Union of India, 1988 (36) ELT 201 (SC).
(vi) As per the understanding of the Applicant, the services supplied by UPPTCL under the agreement to carry out deposit work, as agreed upon between the Applicant and UPPTCL, are in nature of transmission of electricity for the reasons furnished hereunder, which are exempt from payment of GST.
(vii) Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 notifies the following service to be exempted from the levy of GST
