Case Law Details

Case Name : In re Gujarat Energy Transmission (GST AAR Gujarat)
Appeal Number : Advance Ruling No. GUJ/GAAR/R/12/2019
Date of Judgement/Order : 20/08/2019
Related Assessment Year :
Courts : AAR Gujarat (99) Advance Rulings (1539)

In re Gujarat Energy Transmission (GST AAR Gujarat)

Whether or not the cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges are liable to GST.

Question: Whether or not the cost of construction/ erection of Bays/ SubStations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax 2017 and since the said service is exempt from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST.

Answer: Answered in the Negative. The cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by GETCO from the consumers, do not form part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax Act, 2017.

GETCO is liable to pay GST @ 18% (CGST @9% and SGST@9%) on amount recovered towards cost of the construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers along with supervision charges under the service category of “Construction Services” (HSN Code-9954/995423).

Further, GETCO is also liable to pay GST @ 18% (CGST @9% and SGST@9%) on recovery of other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc. under the residual category of services i.e. “999799- Other services n.e.c.”.

FULL TEXT OF ORDER OF BEFORE THE AUTHORITY OF ADVANCE RULING,GUJARAT

2. M/s Gujarat Energy Transmission Corporation Ltd., Sardar Patel Vidyut Bhavan, Race Course, Vadodara-390007 (herein after referred to as the “Applicant” or “GETCO” for the sake of brevity), vide Annexure ‘A’ sheet to their application dated 08.02.2018, specifically mentioned their queries as under:

“Whether or not the cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax 2017 and since the said service is exempted from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST. “

2.1. The Applicant, vide Annexure ‘B’ &’C‘ sheet to their application dated 08.02.2018, has submitted the Statement of Facts, which are as follows:

A. STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS ON WHICH THE ADVANCE RULING IS REQUIRED;

i) The Applicant is a Company incorporated under the Companies Act, 1956, which was promoted by the erstwhile Gujarat Electricity Board and is also holder of Registration certificate bearing No. 24AABCG4029R2ZC.

ii) In exercise of powers conferred under Section 39(1) of the Electricity Act, 2003, the Gujarat Government, by Notification No.GHU-2004-31-GEB-l 104-2946-K dated 29th May 2004, notified the Applicant (GETCO) as “State Transmission Utility (STU)” with effect from 1st June 2004. Accordingly, the Applicant is a “State Transmission Utility (STU)”, as defined under Section 2(67) of the Electricity Act, 2003 read with Section 39(1) of the said Act.

iii) As a State Transmission Utility (STU), the Applicant supplies the “Service of Transmission of Electricity” to consumers.

iv) As a State Transmission Utility supplying the Service of “Transmission of Electricity”, the Applicant is required under Section 39 of the Electricity Act 2003, to provide non-discriminatory open access to its transmission system for use by any licensee, generating company or any consumer.

v) The supply of Service of “Transmission of Electricity” under “non-discriminatory open access” is provided in accordance with the Gujarat Electricity Regulatory Commission (Terms and Conditions of Intra-State Open Access) Regulations, 2011.

vi) To supply the service of “Transmission of Electricity” to consumers under “non-discriminatory open access”, construction/erection of ‘Bays’/ ‘SubStations’, ‘Overhead Lines’ and ‘Underground cables’ is required to be carried out. The cost of such construction/erection is borne by/ recovered from the consumers. However, the Bays/ Sub-Stations, Overhead Lines and Cables so constructed/erected, vest in the Applicant and are the property/assets of the Applicant.

vii) An option is provided to the consumers to themselves arrange for having such construction/ erection or part thereof carried out. Where the consumers do not themselves arrange to have such construction/ erection or part thereof carried out, the Applicant gets such construction/ erection carried out by EPC Contractors who supply works contract service of construction/erection to the Applicant. The cost of such construction/erection is recovered by the Applicant from the consumers. For this purpose, the Applicant provides to the consumer an Estimate of the cost of material, labour, contingency charges and supervision charges (15% of cost of materials and labour) in terms of the GERC Regulations. The consumer then makes a Deposit of the Estimate with the Applicant. After the completion of the construction/erection work, the Deposit is adjusted against the actual cost of labour and material and supervision charge @ 15% of such actual cost.

viii) Irrespective of whether the consumers themselves arrange to have the aforesaid construction/erection carried out or whether the Applicant arranges for the same and recovers the cost and supervision charges from the consumers, the Bays/Sub-Stations, Overhead Lines and Cables so constructed/erected vest in the Applicant and are the property/assets of the Applicant.

ix) Operation and maintenance charges are also recovered from the consumer for maintaining and operating of constructed assets of GETCO as per the Gujarat Electricity Regulatory Commission’s Regulations.

x) The Supply of Service of “Transmission of Electricity” by State Transmission Utility is exempted from the levy of Central GST vide Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 as well as from the levy of Gujarat State GST vide Sr. No.25 of Notification No. 12/2017-State Tax (Rate) dated 30th June 2017.

B. Statement Containing the Applicant’s interpretation of Law or Facts as the case may be in respect of the Questions on which Advance Ruling is required:

i) The Applicant, who is a State Transmission Utility within the meaning of Section 2(67) of the Electricity Act 2003 read with Section 39(1) of the said Act, supplies the Service of “Transmission of Electricity”.

ii) For the supply of the service of “Transmission of Electricity” under “non- discriminatory open access” to consumers, construction/erection of ‘Bays’/’Sub-Stations’, ‘Overhead Lines’ and ‘Underground cables’ is required to be carried out. Where the consumers do not themselves arrange to have such construction/ erection or part thereof carried out, the Applicant gets such construction/ erection carried out by Civil Contractors who supply works contract service of construction/erection to the Applicant. The cost of such construction/erection, which is equal to the cost of labour and material and supervision charges @ 15% of cost of labour and material, is recovered by the Applicant from the consumers. Although the cost is recovered from the consumers, the Bays/ Sub-Stations, Overhead Lines and Cables so constructed/erected vest in the Applicant and are the property/assets of the Applicant.

iii) In terms of Section 15 (1) of the Central Goods and Services Tax Act 2017, the value of supply of a service shall be the transaction value, which is the price actually paid or payable for the supply of service when the supplier and recipient are not related and price is the sole consideration for the supply. Further, Section 15(2)(b) of the said Act provides that the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and is not included in the price actually paid or payable for the supply of the service. Further, Section 15(2)(c) provides that the value of supply shall include any incidental expenses charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of services at the time of, or before supply of services. Thus, the cost of aforesaid construction/erection and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges which are incurred by the recipient of the supply of service of Transmission of Electricity (consumer) and which are charged by the Applicant from the consumer will form part of the value of supply of service of “Transmission of Electricity”.

iv). The service of “Transmission of Electricity” by a State Transmission Utility is exempt from GST, vide Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 and Sr. No.25 of Notification No. 12/2017-State Tax (Rate) dated 30th June, 2017. Thus, the entire value of the supply of service of “Transmission of Electricity” by the Applicant which as submitted in para (iii) above will include the aforesaid cost of construction/erection in addition to the Transmission charges, is exempt from GST and accordingly no GST is payable on the said cost of construction/ erection recovered from the consumers to whom the supply of service of “Transmission of Electricity” is made by the Applicant.

v. Except the supply of service of “Transmission of Electricity”, no other supply of any goods or service is made by the Applicant to the consumer. As submitted herein above, the Bays/Sub-Stations, Overhead Lines and Cables which are constructed/erected for the purpose of supply of service of “Transmission of Electricity” vest in the Applicant and are the property/assets of the Applicant. Thus, there is no supply other than supply of service of “Transmission of Electricity” to the consumer and the supply of service of “Transmission of Electricity” is exempt from GST.

vi). In the circumstances, no GST is payable by the Applicant.

3. Further, the Applicant, vide their letter Ref. No. GETCO/GM(F&A)/Advance Ruling/379 dated 20.04.2018 submitted their written submission of the personal hearing proceedings conducted on 12.04.2018 where arguments were canvassed by their counsel namely Mr. Jaideep C. Patel, Advocate, as under:

(i) The Applicant is a Government Company and is notified as a State Transmission Utility under Section 39(1) of the Electricity Act 2003.

(ii) As a State Transmission Utility, it is the function of the Applicant under Section 39 (2) (d) of the Electricity Act 2003 to provide non-discriminatory open access to its transmission system to any licensee, generating company or consumer.

(iii) Accordingly, the Applicant supplies the service of “Transmission of Electricity”.

(iv) To supply the service of “Transmission of Electricity” under ‘Non-discriminatory open Access”, construction/ erection of “Bays/ SubStations, Overhead Lines, Underground cables, etc” is required to be carried out.

(v) Under the GERC (Terms and conditions of Intra-State Open Access) Regulations 2011, the cost of such construction/ erection has to be borne by the consumer. However, under the Regulations, the Bays/ Substations, Overhead Lines, etc. so constructed/erected vest in the Applicant and are the property/assets of the Applicant, notwithstanding that the cost thereof is borne by/ recovered from the consumer.

(vi) An option is provided to the consumers to themselves arrange for having such construction/ erection or part thereof carried out. Where the consumers do not themselves arrange to have such construction/erection or part thereof carried out, the Applicant gets the same carried out by EPC Contractors who supply works contract service to the Applicant.

(vii) Where the Applicant gets the construction/ erection carried out by EPC Contractors, the EPC Contracts pay GST and the cost of construction/erection is recovered by the Applicant from the consumers. Hereto annexed as Exhibit “A” by way of example is an Invoice raised by EPC Contractor on the Applicant which shows charging of GST.

(viii) For recovering the cost of construction from the consumers, the Applicant provides to the consumer, an Estimate of the cost of material, labour, contingency charges and supervision charges (15% of cost of materials and labour) in terms of GERC Regulations, The Consumer then makes a Deposit of the Estimate with the Applicant. After the completion of the construction/ erection work, the Deposit is adjusted against the actual cost of labour and material and supervision charge at 15% of such actual cost.

(ix) Since as state above, though the cost of construction/ erection is borne by and recovered from the consumer, the Bays/ Sub-stations, Overhead Lines, etc so constructed/erected vest in the Applicant and are the property/assets of the Applicant. There is no question therefore of the Applicant having rendered any construction service to the consumers. What is constructed by the EPC contractors becomes the property of the Applicant and not of the consumer and hence there is no question of the Applicant having rendered any construction service to the consumer.

(x) In terms of Section 15 (1) of the Central Goods and Services Tax Act 2017, the value of supply of a service shall be the transaction value, which is the price actually paid or payable for the supply of service when the supplier and recipient are not related and price is the sole consideration for the supply. Further, Section 15 (2) (b) of the said Act provides that the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and is not included in the price actually paid or payable for the supply of the service. Further, Section 15 (2) (c) provides that the value of supply shall include any incidental expenses charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of services at the time of, or before supply of services. Thus, the cost of aforesaid construction/erection and other charges including Prorata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges which are incurred by the recipient of the supply of service of Transmission of Electricity (consumer) and which are charged by the Applicant from the consumer will form part of the value of supply of service of Transmission of Electricity.

(xi) The service of “Transmission of Electricity” by a State Transmission Utility is exempt from GST, by Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Sr. No.25 of Notification No. 12/2017-State Tax (Rate) dated 30th June 2017. Thus the entire value of the supply of service of “Transmission of Electricity” by the Applicant which as submitted in para 3 above will include the aforesaid cost of construction/ erection in addition to the Transmission charges, is exempt from GST and accordingly no GST is payable on the said cost of construction/ erection recovered from the consumers to whom the supply of service of “Transmission of Electricity” is made by the Applicant.

(xii) At the hearing, the Hon’ble Members referred to the fact that the Applicant is recovering supervisions charges and whether that could be said to be towards supply of service by the Applicant to the consumer. As submitted herein above, what is constructed by the EPC contractors becomes the property of the Applicant and not of the consumer and therefore any supervision carried out by the Applicant for such construction cannot be said to be supply of service by the Applicant to the consumer. In any event, assuming while denying that such supervision amounts to supply of a ser0vice, the same is in conjunction with the principal supply of ‘Transmission of electricity” and therefore, is a composite supply as defined in Section 2(30) of the Central Goods and Services Act 2017. Accordingly, as provided in Section 8(a) of the said Act, the same has to be treated as supply of the principal supply of “Transmission of Electricity” only which as submitted herein above is exempt from GST.

DISCUSSION AND FINDINGS:

4. We have carefully gone through the application dated 08.02.2018 filed for advance ruling, written submission dated 12.04.2018 of the Applicant and the comments of the jurisdictional authority.

5. The applicant has sought for advance ruling for the following query:

“Whether or not the cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax Act, 2017 and since the said service is exempted from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST.”

6. We find that the Applicant is a Government Company and is notified as a ‘State Transmission Utility’ under Section 39(1) of the Electricity Act, 2003. As a State Transmission Utility, it is the function of the Applicant under Section 39 (2) (d) of the Electricity Act, 2003 to provide non-discriminatory open access to its transmission system to any licensee or generating company on payment of the transmission charges. However, an option is provided to the consumers to themselves arrange for having construction/erection of “Bays/ Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof carried out. Where the consumers do not themselves arrange to have such construction/erection or part thereof carried out, the Applicant gets the same carried out through EPC Contractors for the consumers. Under the Gujarat Electricity Regulatory Commission (Terms and Conditions of Intra-State Open Access) Regulations, 2011 (in short GERC Regulations), the cost of such construction/erection has to be borne by the consumer. Accordingly, the Applicant recovers the actual cost of labour and material used for such construction/ erection along with supervision charges at 15% of such actual cost thereof from the consumers.

Though the cost of such construction/ erection is borne by and recovered from the consumer, the Bays/Sub-stations, Overhead Lines, etc. so constructed/erected vest in the Applicant and are the property/assets of the Applicant, as per the GERC Regulations.

7. The applicant is engaged in business of transmission of electricity and for providing the transmission of electricity, there is a requirement of electricity distribution infrastructure. Their consumer has option to either create the said infrastructure on his own or alternatively the Applicant gets the same carried out through EPC Contractors for the consumers. Where the consumers do not themselves arrange to have such construction/erection or part thereof carried out, the Applicant gets the same carried out through EPC Contractors for the consumers. Here, the facilitation work done by the applicant for consumers is the construction/erection of “Bays/Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof”. Thus, the applicant constructs a dedicated transmission line to the point of connection to enable connectivity to the grid for and on behalf of their consumers. As per the provisions of the Electricity Act, 2003 and GERC Regulations, the applicant recovers the actual cost of such construction/ erection along with applicable supervision charges from consumers.

8.We find that the applicant is doing a facilitation work on behalf of its consumers for providing facilities of creating assets for and on behalf of their consumers to enable their consumers to obtain their desired electricity in relation to transmission of electricity. Here, the facilitation work done by the applicant for consumers is the construction/erection of “Bays/Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof”. Thus, the applicant constructs a dedicated transmission line to the point of connection to enable connectivity to the grid for and on behalf of their consumers. As per the provisions of the Electricity Act, 2003 and GERC Regulations, the applicant recovers the actual cost of such construction/ erection along with applicable supervision charges from consumers. Thus, the applicant has supplied the services by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers for a consideration (the actual cost of such construction/ erection along with applicable supervision charges) in the course or furtherance of business.

9. We also find that there is an exemption entry in terms of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, which reads as under:

Sr. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition
25 Heading 9969 Transmission or distribution of electricity by an electricity transmission or distribution utility Nil Nil

The above entry provides exemption from GST only to the service of “transmission and distribution by an electricity transmission or distribution utility”. The said exemption is not available to the services provided by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers to the applicant, as mentioned above.

10. We further note that vide Sr. No. 10A of the Notification No.14/2018-Central Tax (Rate) dated 26.07.2018, the following services supplied by electricity distribution utilities, have been exempted from levy of CGST:

Sr. No. Chapter, Section or Heading, Description of Services Rate (per cent.) Condition
(1) (2) (3) (4) (5)
10A Heading No.9954 Services supplied by electricity distribution utilities by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the tube well of the farmer or agriculturalist for agricultural use. Nil Nil

The above entry grants exemption to the services supplied by electricity distribution utilities by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the tube well of the farmer or agriculturalist for agricultural use. In the above case, the applicant has supplied the services by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers in the course or furtherance of business. Hence, said exemption is not available to the applicant.

11. It is very pertinent to note that the said construction/erection of “Bays/Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof” are optional services and one may or may not choose to avail these additional services. Hence, these services cannot be said to be naturally bundled and there is no composite supply. Each service is unique, different, not inter dependent on each other and is optional. Further, these construction services are to be provided prior to the supply of ‘Transmission of electricity” and are not naturally bundled and supplied in conjunction with each other in the ordinary course of business. Therefore, it cannot be construed that the same is in conjunction with the supply of ‘Transmission of electricity” and a “composite supply” as defined in Section 2(30) of the Central Goods and Services Act, 2017, which reads as under:

(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration.— Where goods are pa,cked and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply;

11.1 Consideration for both services are charged separately and, hence, the value of “Construction Services” cannot form part of the value of service of “Transmission of Electricity” in terms of Section 15 of the Central Goods and Service Tax Act, 2017. Consequently, the said construction services cannot be treated as supply of the “Transmission of Electricity” service. In view of the above, we find that the construction services provided by the applicant are not in the nature of composite supply and, therefore, the tax liability thereof has to be determined by treating the same different from the supply of transmission and distribution of electricity.

12. The HSN Code for the said supply of services by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers shall be 9954/995423, as detailed hereunder:

Sr. No. Chapter, Section or Heading Service Code (Tariff) Description of service
(1) (2) (3) (4)
15 Group 99542 995423 General construction services of long distance under ground/overland/ submarine pipelines, communications and electric power lines (cables); pumping stations and related works; transformer stations and related works.

12.1 The rate of CGST on aforesaid services shall be according to the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended, extract whereof is reproduced herein under:

Sr. No. Chapter, Section or Heading, Description of Services Rate (per cent.) Condition
(1) (2) (3) (4) (5)
3 Heading 9954 (Construction services) (xii) Construction services other than (i), (ii),(iii),(iv), (v), (vi), (vii), (viii), (ix), (x) and (xi) above. 9

12.2 The rate of GGST on aforesaid services shall be also 9% as per the corresponding Notification to the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under GGST Act, 2017.

13. Now, we discuss about taxability of the amount recovered from consumers as other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc., towards expenses incurred in providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity. We find that as per regulation 3 of the Notification No.9 dated 31.03.2005 issued by Gujarat Electricity Regulatory Commission (GERC), every Distribution Licensee is allowed to recover from the applicant, requiring supply of electricity, any expenses that the Distribution Licensee shall be required to reasonably incurred to provide any electric line or electrical plant specifically for the purpose of giving such supply to the applicant. We further find that the “Distribution Licensee” as defined in regulation 2.1 (IV) of aforesaid notification, means a licensee authorized to operate and maintain a Distribution System for supplying electricity to the consumers in his area of supply. Further, we find that the mandate of GETCO is to provide transmission services for conveyance of electricity from the generating stations of GETCO and other generating stations and also interconnection points of Powergrid Corporation of India Ltd. and other Transmission Licensees to the interconnection points of the DISCOMS (Distribution utilities) and also undertakes the functions of State Transmission Utility, State Load Dispatch Centre and System Operator as provided in the Electricity Act, 2003. Accordingly, Pro-rata charges are recovered by them considering the augmentation to be carried out at the upstream sub-station and augmentation of existing substation. Other charges like as pro-rata charges, proportionate line charges, registration fees, operation and maintenance charges etc. recovered by GETCO from its various consumers are nothing but the consideration to enable them to create future assets for the mandate it is given. Thus, GETCO recovers said charges for providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity to the consumers.

12.1 We find that by virtue of the Entry No.25 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, only the service of “transmission and distribution by an electricity transmission or distribution utility” was exempted from tax under the GST Acts. A comparison with regulation 3 of the Notification No.9 dated 31.03.2005 issued by the Gujarat Electricity Regulatory Commission (GERC), shows that the charges are for “any expenses that the Distribution Licensee shall be required to reasonably incurred to provide any electric line or electrical plant specifically for the purpose of giving such supply to the applicant”. Thus, the nature of services provided by GETCO in the present case is not covered under the above exemption entry of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. Said amounts are recovered from consumers for providing of their electric line or electrical plant or other facilities for the purpose of giving the supply of electricity to them, which are ancillary services provided in relation to service of the transmission of electricity. Electricity charges recovered for consumption of electricity are only exempted under above entry. Amount collected towards other ancillary services are taxable under GST. These services are, therefore, taxable under GST under the residual category of services i.e. “999799- Other services n.e.c.” and, hence, GETCO is liable to pay GST @ 18% (CGST @9% and SGST@9%) on aforesaid other charges recovered from its consumers.

13. In view of the foregoing discussion, we rule as under –

RULING

Question: Whether or not the cost of construction/ erection of Bays/ SubStations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax 2017 and since the said service is exempt from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST.

Answer: Answered in the Negative. The cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by GETCO from the consumers, do not form part of the value of supply of service of “Transmission of Electricity” under Section 15 of the Central Goods and Service Tax Act, 2017.

GETCO is liable to pay GST @ 18% (CGST @9% and SGST@9%) on amount recovered towards cost of the construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers along with supervision charges under the service category of “Construction Services” (HSN Code-9954/995423).

Further, GETCO is also liable to pay GST @ 18% (CGST @9% and SGST@9%) on recovery of other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc. under the residual category of services i.e. “999799- Other services n.e.c.”.

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