Case Law Details
Association of Power Producers Vs Solar Energy Corporation of India Limited & Ors. (Delhi High Court)
CBIC is not obligated to issue clarifications on GST issues raised by way of representation or otherwise: Delhi HC
Summary: The Delhi High Court, in Association of Power Producers v. Solar Energy Corporation of India Ltd., ruled that the Central Board of Indirect Taxes (CBIC) is not obligated to provide clarifications on taxpayer queries regarding GST applicability. The case involved a petition by the Association of Power Producers requesting the CBIC to clarify whether GST applies to Battery Energy Storage Systems (BESS). The petitioners argued that ambiguity in government guidelines had created confusion among bidders participating in a tender issued by the Solar Energy Corporation of India Limited (SECI). The court, however, held that GST liability must be determined by referring to statutory provisions rather than seeking direct clarifications from CBIC. The court cited Section 168 of the CGST Act, which grants CBIC the authority to issue general directions for uniform implementation but does not mandate responses to specific taxpayer queries. The judgment emphasized that the proper route for resolving GST-related uncertainties is through statutory interpretation or the Advance Ruling mechanism. The court also dismissed the petition due to its late filing, noting that any concerns should have been raised during the pre-bid meeting. This ruling reinforces the principle that taxpayers must rely on GST laws and structured dispute resolution mechanisms rather than expecting regulatory bodies to issue case-specific clarifications.
Facts:
Association Of Power Producers (“the Petitioner”) has filed a writ petition seeking issuance of appropriate writ or order or directions be issued to Solar Energy Corporation of India Limited (“SECI”) i.e., Union of India, through the Ministry of Power to decide on the clarifications sought by the Petitioner in terms of its representation dated August 27, 2024, in a time bound manner.
The Petitioner also urged that directions be issued to the CBIC for issuance of clarification on the applicability of the GST on Battery Energy Storage Systems (“BESS”).
Issue:
Whether CBIC is obligated to issue clarification on GST applicability for specific taxpayer queries?
Held:
The Hon’ble Delhi High Court in the case of W.P. (C) No. 12511 of 2024 held as under:
- Noted that, as per Section 168 of the CGST Act, the CBIC, if it considers expedient for the purpose of uniformity in the implementation of the CGST Act, may issue orders, instructions or directions to the Central Officers as it may deem fit. However, there is no provision where CBIC is required to issue clarifications on separate queries raised by taxpayers directly.
- Opined that, the Petitioner have to ascertain whether GST payable in a certain scenario in line with the provisions of the GST. The CBIC cannot issue any binding clarification as to the chargeability of the BESS service to tax.
- Held that, the writ petition is dismissed.
Our Comments:
The judgment reaffirms that the taxpayers cannot demand direct clarifications from CBIC, but must rely on statutory provisions or seek an Advance Ruling.
Relevant Provision:
Section 168 of the CGST Act:
“Section 168: Power of Government to extend time limit in special circumstances
(1) Notwithstanding anything contained in this Act, the Government may, on the recommendations of the Council, by notification, extend the time limit specified in, or prescribed or notified under, this Act in respect of actions which cannot be completed of complied with due to force majeure.
(2) The power to issue notification under sub-section (1) shall include the power to give retrospective effect to such notification from a date not earlier than the date of commencement of this Act.
Explanation.- For the purposes of this section, the expression “force majeure” means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of this Act.”
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The petitioner claims to be an Association of Power Producers and states that it has filed the present petition on behalf of its members.
2. The petitioner prays that an appropriate writ or order or directions be issued to respondent no.1 [Solar Energy Corporation of India Limited (SECI)] and respondent no.2 (Union of India, through Ministry of Power) to decide on the clarifications sought by the petitioner in terms of its representation dated 27.08.2024 in a time bound manner.
3. The petitioner also prays that directions be issued to the Central Board of Indirect Taxes (CBIC) to clarify the applicability of the Goods and Services Tax (GST) on Battery Energy Storage Systems (BESS).
4. On 26.06.2024, respondent no.1 invited Request for Selection (RfS) for setting up of 1000 MW/2000 MWh standalone BESS in India under Tariff-Based Global Competitive Bidding. Clause 30.2 (III)(e) of the said RfS, which is the centre of the controversy in the present petition, expressly provides that tariff to be quoted in the Financial Bid by bidders would be exclusive of GST. The GST on the said service (BESS) would be passed through to the Buying Entity. The said clause is set out below :-
“(e) Tariff to be quoted in the Financial Bid shall be exclusive of GST (for providing the storage as a service). GST levied on the storage service being provided by the Project, if any, shall be passed through to the Buying Entity.”
5. According to the petitioner, the said clause has created some confusion in the minds of the bidders. The learned counsel submits that if GST is leviable on BESS service then, the bidders would be entitled to input tax credit (ITC), however, if GST is not leviable on the service in question, then the bidders would not be entitled to ITC on their input supplies. He submits that the same would make a difference of as much as 20% in the value of the bids. He also contends that there was no ambiguity in the applicability of the GST at the time of the issuance of RfS, however, the same has arisen on account of the Government of India, Ministry of Power issuing the Draft ‘Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants’ (Draft PSP Guidelines), which were issued on 22.08.2024. In terms of the Draft PSP Guidelines, GST is applicable to the service of storage of energy from Pumped Storage Plants.
6. He submits that but for the issuance of the Draft PSP Guidelines, there was no ambiguity that the service of BESS would not be exigible to GST.
7. It is in the aforesaid context that the petitioner prays that clarifications be issued by respondent no.1, Government of India, Ministry of Power, as well as the CBIC.
8. The learned counsel for respondent no.1 points out that the RfS was issued on 26.06.2024. The last date of submitting of the bids was 12.08.2024 and the pre-bid meeting for clarifying any issue was held on 12.07.2024. She submits that the petitioner has approached this Court on the eve of the opening of the bids which is scheduled for tomorrow (11.09.2024) and therefore, the petition ought to be rejected.
9. She also states that the Draft PSP Guidelines issued by the Government of India, Ministry of Power on 22.08.2024 are not applicable to RfS. Therefore, the entire premise on the basis of which the petitioner has approached this Court, is erroneous.
10. We have briefly heard the counsel for the parties.
11. The petitioner’s prayer that directions be issued to CBIC to clarify the applicability of GST cannot be acceded to. GST is chargeable by virtue of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act), the State Goods and Services Tax Act, 2017 (hereafter the SGST Act) and the Integrated Goods and Services Tax Act, 2017 (hereafter the IGST Act).
12. Any contentious issue as to whether Central GST, State GST, or Integrated GST is leviable on services is required to be answered with reference to the said statutes and the rules made thereunder. There is no provision in the said statutes requiring the CBIC to entertain queries from taxpayers or to provide clarifications regarding the statutory provisions pursuant to queries posed by taxpayers.
13. In terms of Section 168 of the CGST Act/ SGST Act, the CBIC, if it considers it expedient for the purpose of uniformity in the implementation of the CGST Act/SGST Act, may issue orders, instructions or directions to the Central Officers as it may deem fit. However, there is no provision where CBIC is required to issue clarifications on separate queries raised by taxpayers directly.
14. Insofar as the RfS is concerned, there is no ambiguity in the provisions of the RfS that the bids would be evaluated on the basis of tariff sans
15. The petitioner as well as its members have to ascertain whether GST is payable in reference to the relevant GST statutes (the CGST Act/ the SGST Act/ the IGST Act and the Rules made thereunder). Respondent no.1 cannot issue any binding clarification as to the chargeability of the BESS service to tax.
16. We also find merit in the respondents’ contention that the present petition is highly delayed. If the bidders had entertained any apprehension regarding the terms and conditions of RfS, the same were required to be clarified in the Pre-Bid Meeting held on 12.07.2024.
17. In view of the above, we are unable to accept that the prayers as sought for by the petitioner can be granted.
18. The petition is, accordingly, dismissed.
19. The pending application is also disposed of.
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