9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1574 - AAAR - GSTClassification of supply - naturally bundled services or not - composite supply of principal activity of supply of electrical energy or not - activities enlisted by the appellant in the queries such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines and supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them - services can be treated as part of principal supply of transmission or distribution of electricity , which is exempted or not - supplies made to the consumers through contractors and third parties for the purpose of transmission or distribution of electricity or sale of electrical energy - HELD THAT - From Circular No. 34/8/2018-GST, it is clear that the services numbered from (i) to (iv) as provided by DISCOMS to consumer are taxable. It is to be noted that the supply of electricity is a continuous supply whereas the ancillary services provided by the appellant are made at the specific request of the consumer. It is the same principle that guides in the determination of the question whether the ancillary activities form part of the composite supply or not. On perusal of definition of composite supply, it is clear that the ancillary activities of the appellant such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., and supply of meters etc., are not naturally bundled with supply of electricity rather they are supplied by and charged for by the appellant only if demanded or consumed by the customers. Thus, the exemption notified for 'transmission and distribution of electricity' cannot be extended to it's ancillary supplies on the pretext of they being a part of composite supply, which is far from true; and they are taxable irrespective of the fact that whether they are supplied by contractors or third parties. Whether the works executed under Deendayal Upadhyay Gram Jyoti Yojna for Rural Electrification ('DDUGJY'), Integrated Power Development Scheme (IPDS) and Restructured Accelerated Power Development and Reforms Program supplies made through contractors are liable to 12% GST since they are executed under grants provided by central government and no commercial activity is involved with regards these works? - Whether the execution of the Agricultural Demand Side Management Scheme (AGL) works are liable to 12% GST since they are executed for non-commercial purposes? - HELD THAT - It is a settled issue between the appellant and the lower authority that APSPDCL is a Government entity vide Notification No.31/2017 Central Tax (Rate) dt. 13.10.2017. But the issue to be determined is whether the concessional rate of tax is applicable to the appellant - the formation of the appellant company itself is made with an objective of being self-reliant commercially and all the programmes of Deendayal Upadhyay Gram Jyoti Yojna for Rural Electrification ('DDUGJY'), Integrated Power Development Scheme ('IPDS') and Restructured Accelerated Power Development and Reforms Program and the execution of the Agricultural Demand Side Management Scheme (AGL) works taken up by the appellant through the contractors, even though funded by the Central Government with grants of 60% or by the State Government with REC loan funding, have the main objective of making the organization as commercially viable. It clarifies that the works referred by APSPDCL are for commercial purpose and the benefit of concessional rate of 12% as per the Notification No. 24/2017- Central Tax (Rate) dt.21.09.2017 is not applicable to the appellant. Whether the supply of services and goods made by the appellant through contractors by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the tube well of the farmer or agriculturist for agricultural use are exempted vide Notification No.14/2018- Central Tax (Rate) dated 26.07.2018? - HELD THAT - The plain reading of the Heading 9954 clarifies that the exemption is applicable only to the 'electricity distribution utilities' i.e., the appellant alone and it being a exemption notification cannot be interpreted or extended to the contractors who carry out the above mentioned works on behalf of the appellant and therefore the works taken up by contractors are exigible to tax. We concur with the decision of the lower authority in this regard.
Issues Involved:
1. Whether various services related to the supply of electricity are naturally bundled and form part of the composite supply of the principal activity of supply of electrical energy. 2. Whether these services can be treated as part of the principal supply of transmission or distribution of electricity, which is exempted. 3. Whether supplies made to consumers through contractors and third parties for the purpose of transmission or distribution of electricity or sale of electrical energy are also exempted. 4. Whether works executed under specific government schemes are liable to 12% GST. 5. Whether the execution of the Agricultural Demand Side Management Scheme (AGL) works are liable to 12% GST. 6. Whether the supply of services and goods made by the appellant through contractors for extending electricity distribution network up to the tube well of the farmer or agriculturist for agricultural use are exempted. Issue-wise Detailed Analysis: 1. Naturally Bundled Services and Composite Supply: The appellant argued that services such as connection, re-connection, supervision of works, erection of poles, sub-stations, transmission lines, and supply of meters are naturally bundled with the supply of electricity and should form part of the composite supply of the principal activity of supply of electrical energy. However, the ruling clarified that only "Transmission or distribution of electricity by an electricity transmission or distribution utility" is exempt under Notification No. 12/2017-Central Tax (Rate). Ancillary services provided by the appellant, such as those mentioned, are not naturally bundled with the supply of electricity and are taxable. 2. Principal Supply of Transmission or Distribution of Electricity: The appellant contended that all services related to the transmission or distribution of electricity should be treated as part of the principal supply of transmission or distribution of electricity, which is exempt from GST. The ruling, however, held that ancillary services provided by the appellant are not covered under the exemption for transmission or distribution of electricity and are therefore taxable. 3. Supplies Made Through Contractors and Third Parties: The appellant argued that supplies made through contractors and third parties for the purpose of transmission or distribution of electricity or sale of electrical energy should also be exempt. The ruling clarified that the exemption for transmission and distribution of electricity does not extend to ancillary services provided by contractors or third parties, and these services are taxable. 4. Works Executed Under Government Schemes: The appellant sought a concessional GST rate of 12% for works executed under schemes like Deendayal Upadhyay Gram Jyoti Yojna (DDUGJY), Integrated Power Development Scheme (IPDS), and Restructured Accelerated Power Development and Reforms Program. The ruling noted that these schemes, although funded by government grants, aim to make the organization commercially viable. Therefore, the works executed under these schemes are for commercial purposes and are not eligible for the concessional rate of 12% GST. The applicable rate is 18%. 5. Agricultural Demand Side Management Scheme (AGL): The appellant argued that works executed under the AGL scheme should be liable to 12% GST as they are for non-commercial purposes. The ruling held that the works under the AGL scheme are also for commercial purposes and are not eligible for the concessional rate of 12% GST. The applicable rate is 18%. 6. Exemption for Services to Farmers: The appellant sought exemption for services and goods supplied through contractors for extending the electricity distribution network up to the tube well of the farmer or agriculturist for agricultural use under Notification No. 14/2018-Central Tax (Rate). The ruling clarified that the exemption applies only to the electricity distribution utilities (the appellant) and not to contractors. Therefore, works carried out by contractors are taxable. Conclusion: The Appellate Authority upheld the ruling of the Authority for Advance Ruling, confirming that ancillary services related to the supply of electricity are taxable, works executed under government schemes are not eligible for a concessional rate of 12% GST, and services provided by contractors for extending the electricity distribution network to farmers are also taxable. The appeal was dismissed, and the decision of the lower authority was confirmed and upheld.
|
