Services ancillary to electricity transmission or distribution utility is taxable under GST or exempt from GST
On 01st March 2018 Government issued Clarifications regarding GST in respect of certain services vide Circular No. 34/8/2018-GST where in S.No. 4 it was stated that Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017- CT (R), Sl. No. 25 Dated 28th June 2017.
The other services such as :-
provided by DISCOMS to consumer are taxable.
In the case of Torrent Power Ltd. Vs. Union of India Gujarat High Court has quashed the taxability of above 5 services by stating that it is being ultra vires the provisions of section 8 of the Central Goods and Services Tax Act, 2017 as well as Notification No.12/2017- CT (R) serial No.25.
Base taken for arriving at this decision was these services are ancillary to principal supply which is Transmission and distribution of electricity and such services are exempt under GST by virtue of notification No. 12/2017- CT (R), Sl. No. 25, therefore composite supply will also be exempt as per section 8(a) of CGST Act, 2017.
Relevant sections of CGST Act 2017 :
Section 8:- Tax liability on composite and mixed supplies.
(a) composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
Section 2 (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;
Section 2 (90) : “principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;