Case Law Details
In re Tamilnadu Generation and Distribution Corporation Limited (GST AAAR Tamil Nadu)
The Appellate Authority for Advance Ruling (AAAR) in Tamil Nadu recently issued an order regarding the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO). This case revolves around TANGEDCO’s appeal against the Advance Ruling No. 122/AAR/2023, which addressed the applicability of Goods and Services Tax (GST) on various charges related to the distribution of electricity. This article delves into the AAAR’s decision, examining the grounds of the appeal, the arguments presented, and the final ruling.
Background of the Appeal
TANGEDCO, a state government entity responsible for electricity generation and distribution in Tamil Nadu, filed an appeal under Section 100(1) of the Tamil Nadu Goods & Services Tax Act 2017 and the Central Goods & Services Tax Act 2017. The appeal was against the Advance Ruling issued on December 19, 2023. TANGEDCO’s appeal raised several questions about the GST applicability on charges inherent to its services.
Key Questions and Initial Ruling
TANGEDCO sought clarity on whether GST applied to various charges, including network/wheeling charges, cross-subsidy surcharge, application fees, meter rents, and many more. The Advance Ruling Authority initially determined that only certain charges, such as the belated payment surcharge, dishonored cheque service charge, and network/wheeling charges, were exempt from GST under Entry No. 25 of Notification No. 12/2017-CT (Rate) dated June 28, 2017. All other charges were deemed liable for GST at appropriate rates.
Grounds for Appeal
TANGEDCO contested the ruling, arguing that many of these charges should be considered part of a ‘composite supply’ of electricity, which should be exempt from GST. They cited the Gujarat High Court’s decision, which struck down a related circular, suggesting that ancillary services to electricity transmission and distribution should be treated as a bundled supply exempt from GST.
Delay in Filing the Appeal
The appeal faced a procedural hurdle due to a one-day delay in filing, beyond the 30-day limit. TANGEDCO attributed the delay to staff shortages and administrative challenges, given their historical exemption from indirect tax compliance. The AAAR had to first decide whether to condone this delay before addressing the merits of the case.
Personal Hearing and Arguments
During the personal hearing, TANGEDCO’s authorized representative elaborated on the reasons for the delay, emphasizing the entity’s lack of a dedicated tax compliance team and the newness of GST regulations for their operations. This explanation aimed to demonstrate that the delay was neither wanton nor deliberate but a result of genuine administrative constraints.
AAAR’s Findings and Ruling
The AAAR carefully reviewed the submissions and statutory provisions. It acknowledged the genuine nature of the administrative challenges faced by TANGEDCO and condoned the one-day delay, allowing the appeal to proceed. The AAAR agreed that the delay fell within the permissible condonable period as specified under Section 100(2) of the CGST/TNGST Act, 2017.
In terms of the GST applicability on various charges, the AAAR upheld the initial ruling, maintaining that only specific charges were exempt while others remained liable for GST. This decision reinforced the need for precise compliance with GST regulations for ancillary services related to electricity distribution.
Conclusion
The AAAR’s decision in TANGEDCO’s appeal underscores the complexities of GST compliance for state utilities engaged in electricity distribution. While TANGEDCO succeeded in getting the delay in filing the appeal condoned, it did not achieve a broader exemption for the various charges under dispute. This ruling serves as a critical reminder for similar entities to ensure diligent compliance with GST provisions and to be prepared for rigorous scrutiny in tax-related matters.
Read order also: GST on transactions between TANGEDCO & TANTRANSCO
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are in pan materia and have the same provisions in like matter and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act, 2017.
2. The subject appeal was filed under Section 100(1) of the Tamilnadu Goods & Services Tax Act 2017/Central Goods and Service Tax Act, 2017 (hereinafter referred to the Act’) by M/ s Tamil Nadu Generation and Distribution Corporation Ltd., (hereinafter referred to as ‘Appellant). The Appellant was registered under the GST Act vide GSTIN 33AADCT4784E1ZC. The appeal was filed against the Advance Ruling No.122/AAR/2023 dated 19.12.2023 passed by the Tamilnadu State Authority for Advance ruling on the Application for Advance ruling filed by the Appellant.
3.1. The Appellant, as a State Government entity, is assigned the functions of generation and distribution of electricity. The appellant is “distribution licensee” in terms of the provisions of the Electricity Act, 2003. In effecting the distribution service as per the various provisions of the Act, charges for various activities, which are inherent and essential to electricity distribution service are charged as stipulated. The question raised in the application for advance ruling was as under:
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Question(s) on which advance ruling was required |
1. GST on network/wheeling charges, cross subsidy surcharge, arid additional surcharge which are charges for distribution of electricity charged by the Applicant.
2. Liability to levy of GST on the following: 1. Application fee 2. Meter rent 3. Testing fee 4. Harmonic Compensation charges 5. Capacitor Compensation charge 6. Estimate charges for Additional load or reduction in load 7. Excess contracted load charges 8. Belated payment charges 9. Service/line, structure and equipment shifting char, 10. Name transfer charge 11. Reconnection charge 12. Consumer Meter card replacement charge 13.Dishonoured cheque service charge 14. Charges for restoration of cheque payment facility 15. Excess demand charge and excess energy charge during restriction and control of supply 16. Labour charges for shifting of meters or shifting of service lines 17. Excess demand and excess energy charges 18. Charges for providing CMRI data 19. Recoveries from consumers for damage to board properties 20. Changing meter at the request of the consumer 21.Inspection charges 22.Levy of charges for reduction in demand 23. Changing/shifting of meter board/LTCT box/HT box due to damage or for accommodating additional safety features 24. Replacement of damaged/burnt meter 25.Temporary disconnection at the request of the consumer 26. Charges for furnishing certified copies of documents to consumer 27.Additional surcharge 28.Tariff change 29. Dismantling charges |
The Authority for Advance Ruling (AAR) vide Ruling No.122/AAR/2023 dated 19.12.2023 ruled that the charges collected by the Appellant for the activities, viz., Belated Payment Surcharge, Dishonoured cheque service charge, and Network/Wheeling charges are exempted from GST as per entry No.25 of the Notification No.12/2017-CT (Rate) dated 28.06.2017, and that all other charges are liable for GST at the appropriate rates.
3.2. Aggrieved, the Appellant has filed the present appeal. Under the grounds of appeal as submitted by the Appellant, it is seen that they have argued that Para 4.1 of the Circular dated 01.03.2018 has been struck down as ultra wires by the Hon’ble High Court of Gujarat and that once the services in question are found to be ancillary to transmission and distribution of electricity, the AAR had erred in not holding these services to be naturally bundled supply in the course of ordinary business as a `composite supply’ with the principal supply of electricity by a transmission and distribution utility.
3.3 We observe that in this case, apart from the merits of the case, the appellant had also filed a petition dated 13.03.2024 in the form of an Affidavit of Shri K. Balakrishnan, Chief Financial Controller/ General of TANGEDCO (the appellant) for condonation of one day delay in filing the appeal. Since the filing of appeal by the appellant in the instant case was beyond the prescribed time limit of 30 days from the communication of Order ‘ No. 122/AAR/2023 dated 19.12.2023, we are of the opinion that this aspect as to whether the delay in filing the appeal could be condoned or not, needs to be ascertained, before proceeding to discuss the merits of the case. Accordingly, an opportunity of personal hearing was accorded to the appellant for the limited purpose of condonation of delay.
PERSONAL HEARING:
5.1 Accordingly on 23.04.2024, Shri V Ravindran, Advocate, who is the Authorized Representative (AR) of the Applicant appeared for the hearing in virtual mode and reiterated the submissions made by TANGEDCO in the petition for condonation of delay filed along with the application, wherein it has been stated that the delay in filing the appeal was owing to paucity of staff and also due to administrative reasons.
5.2 When the Members requested the AR to be more specific about the reasons for delay, the AR explained that TANGEDCO, being a 100% Tamilnadu Government owned Electricity Generation and Distribution Utility, they were outside the ambit of indirect tax compliance matters including Central Excise, Service Tax, VAT, etc., in the past. Even after the introduction of GST, TANGEDCO was not having a dedicated cell of office staff for indirect taxation as Transmission or distribution of electricity by an electricity transmission or distribution utility, stood exempted. Only after 3 to 4 years of the introduction of GST, when issues started cropping up in GST related matters, a cell with minimal staff to attend to indirect tax compliance was reported to be formed. He therefore reasoned out that the delay was due to paucity of staff and unfamiliarity with the new concept of taxation.
5.3 The Members conveyed that they would look into the matter and consider the instant case for condonation of delay, accordingly.
DISCUSSION AND FINDINGS:
6.1 We have carefully considered all the material on record, the various submissions made by the Appellant and the applicable statutory provisions. The Appellant is before us, seeking primarily to condone the delay in filing the appeal against the Order No.122/AAR/2023 dated 19.12.2023 passed by AAR.
6.2 The Appellant has stated that they have received the Advance Ruling No.122/AAR/2023 dated 19.12.2023 passed by the AAR on 12.02.2024, and to this effect, they have enclosed a copy of the acknowledgement of postal cover. They have further stated that the appeal could not be filed in time and that the same was filed on 13.03.2024, after a delay of one day. As per Section 100(2) of the CGST/TNGST Act, 2017, 30 days is the time limit for filing the appeal from the date of receipt of the order. Hence, in the present case, the appeal should have been filed on or before 12.03.2024 as the order was reportedly received by the Appellant on 12.02.2024. They have stated that the reason for delay was due to paucity of staff and also administrative reasons but certainly not wanton or deliberate. The said delay being less than one month, the same is condonable in terms of Section 100(2) of the CGST/TNGST Act, 2017. Accordingly, the appellant stated that they are a 100% Tamilnadu Government owned Electricity Generation and Distribution Utility, and that they are making a request for condonation of delay of one day in filing the appeal.
6.3 We observe that in the instant case, having received the advance ruling on 12.02.2024, the appellant ought to have filed the appeal within 30 days, before the Appellate Authority for Advance Ruling by 12.03.2024 under normal circumstances, as laid down under Section 100(2) of the CGST/TNGST Act, 2017. However, the proviso to Section 100(2) of CGST/TNGST Act, 2017, states as follows :-
“Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of thirty days, allow it to be presented within a further period not exceeding thirty days?
6.4 The appellant claims that they have filed the appeal on 13.03.2024, whereby we observe that the appeal has been filed by the appellant after a delay of one day, but in any case, we find that the appeal has been filed within the condonable time limit of 30 days, as specified in the proviso to Section 100(2) referred above. The appellant has further claimed that the reason for delay was due to paucity of staff and also administrative reasons but certainly not wanton or deliberate.
6.5 When the Members requested the authorised representative (AR) to be more specific about the reasons for delay during the personal hearing on 23.04.2024, the AR explained that TANGEDCO, being a 100% Tamilnadu Government owned Electricity Generation and Distribution Utility, they were outside the ambit of indirect tax compliance matters including Central Excise, Service Tax, VAT, etc., in the past. Even after the introduction of GST, TANGEDCO was not having a dedicated cell of office staff for indirect taxation, as Transmission or distribution of electricity by an electricity transmission or distribution utility, stood exempted. Only after 3 to 4 years of the introduction of GST, when issues started cropping up in GST related matters, a cell with minimal staff to attend to indirect tax compliance was reported to be formed. He therefore reasoned out that the delay was due to paucity of staff and unfamiliarity with the new concept of taxation. We further notice that the delay is just one day from the last date for filing the appeal. This being the case, we feel that the appellant has presented sufficient cause that prevented them from filing the appeal within the normal period. Therefore, we are of the considered opinion that the delay of one day beyond the normal time limit in filing the appeal is condonable as provided under the proviso to Section 100(2) of CGST Act, 2017. We further find that this authority is empowered vide Section 101(1) of the CGST/TNGST Acts, 2017 to pass such orders as deemed fit.
7. Accordingly, we pass the following order:
ORDER
The delay in filing the appeal by the appellant beyond the normal time limit of 30 days is condoned in terms of proviso to Section 100(2) of CGST/TNGST Act, 2017, and the appeal will be taken up for consideration on merits.
