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2024 (7) TMI 359 - AAAR - GSTMaintainability of Advance Ruling application - levy of GST - network/wheeling charges - cross-subsidy surcharge - additional surcharge for electricity distribution - fees and charges related to electricity distribution services. Supply of services of distribution of electricity - HELD THAT - The Application for Advance Ruling filed by appellantis not admitted under Section 98 (2) of the CGST/TNGST Act, 2017, in so far as it relates to the taxability of services, and the impugned ruling is modified to that extent - there are no force in the applicant's argument inasmuch as the term applicant means any person registered under this Act and it could be best interpreted that the legislative intent in its wisdom is to draft the relevant proviso to empower the Authority to reject the application in the cases where there is repeated filing of the application before the Authority on the same issue which is either pending for decision or already decided. It is clarified here that transferring cases to 'call book', is an internal mechanism adopted by the Department where cases could not be decided owing to specified reasons. Further, as the term 'Call Book', or the procedures relating to the same have not been provided for under the CGST/TNGST Act, 2017 or the rules made thereunder, no comments are required to be made in this regard. Notwithstanding the same, we would like to clarify that in the instant case of the applicant, the case is neither transferred to 'Call Book', nor the decision on the same is kept pending; instead the application is actually being disposed of, by way of not admitting the application, as provided under Section 98 (2) of the CGST Act, 2017, in so far as it relates to the services in question.
Issues Involved:
1. GST applicability on network/wheeling charges, cross-subsidy surcharge, and additional surcharge for electricity distribution. 2. GST liability on various fees and charges related to electricity distribution services. Detailed Analysis: 1. GST on Network/Wheeling Charges, Cross Subsidy Surcharge, and Additional Surcharge: The Authority for Advance Ruling (AAR) ruled that network/wheeling charges, cross-subsidy surcharge, and additional surcharge are exempt from GST as per entry No. 25 of Notification No. 12/2017-CT (Rate) dated 28.06.2017. The Appellant contended that these charges are ancillary to the transmission and distribution of electricity and should be treated as a 'composite supply' with the principal supply of electricity, thus exempt from GST. The Appellant relied on the Gujarat High Court's decision in the Torrent Power Ltd. case, which struck down para 4.1 of Circular No. 34/8/2018-GST as ultra vires. However, the AAR did not accept this argument, citing the pending appeal before the Supreme Court. 2. GST Liability on Various Fees and Charges: The AAR ruled that the following charges are taxable under GST: - Application fee - Meter rent - Testing fee - Service/line structure and equipment shifting charge - Reconnection charge - Labour charges for shifting meters or service lines - Charges for providing CMRI data - Changing/shifting of meter board/LTCT box/HT box due to damage or for additional safety features - Charges for furnishing certified copies of documents to consumers - Dismantling charge The AAR reasoned that these services are not directly related to the transmission or distribution of electricity and thus do not qualify for the exemption under Notification No. 12/2017-CT (Rate). The Appellant argued that these services are ancillary and should be considered as a 'composite supply' with the principal supply of electricity, citing the Gujarat High Court's decision. However, the AAR maintained its stance, stating that these services can be provided independently and are not naturally bundled with the main service of electricity distribution. Discussion and Findings: The Appellate Authority for Advance Ruling (AAAR) noted that the issue of whether ancillary services to electricity distribution are exempt from GST is sub-judice, pending a decision by the Supreme Court in the Torrent Power Ltd. case. The AAAR emphasized that the exemption under Sl. No. 25 of Notification No. 12/2017-CT (Rate) applies only to the transmission or distribution of electricity and not to ancillary services. The AAAR also highlighted that the term 'applicant' in Section 98(2) of the CGST Act, 2017, refers to any person registered under the Act, and thus the application should not have been admitted for services under dispute. Order: The AAAR modified the AAR's ruling, stating that the application for advance ruling is not admitted under Section 98(2) of the CGST/TNGST Act, 2017, concerning the taxability of the services discussed in paras 5.6.1 and 5.6.3 of the Advance Ruling No. 122/AAR/2023 dated 19.12.2023. The AAAR upheld the AAR's decision on the taxability of other charges, emphasizing that these services are not naturally bundled with the principal supply of electricity and thus do not qualify for the exemption.
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