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TMI Blog2019 (8) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... the "GST Act". * The issue raised by M/s. Rajasthan Rajya Vidyut Prasaran Nigam Limited, 1, Vidyut Bhawan, Janpath, Jaipur, Rajasthan 302005 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (b), (c) & (g) given as under: (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. * Further, the applicant being a registered person (GSTIN is 08AABCR8312A1ZT as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: * The applicant is a company registered under the companies act 1956 vide registration no 17-016485 of 2000-2001(CIN No. U40109RJ2000SGC016485) with its registered offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rajasthan and provides the pathway for power within whole of Rajasthan. RVPN owns, builds, maintains and operates the high-voltage electric transmission system that helps to keep the lights on, businesses running and communities strong. RVPN also owns the shared generating projects as representative of erstwhile RSEB. The main source of revenue of RVPN is the Transmission Charges as per tariff decided by the Rajasthan Electricity Regulatory Commission (RERC), which are recovered from the State DISCOMS and other customers against services of Transmission of electricity through the Transmission system. The transmission system so developed is accounted for as Fixed Assets in the books of RVPN to be depreciated over a useful life as per RERC Tariff Regulations. Simultaneously the Transmission charges are recovered as per Tariff approved by the RERC against services of Transmission of electricity through the Transmission system. In terms of GST Notification No. 12/2017 Central Tax (Rate) dated 28th June 2017, as amended, the services of transmission of Power by an electricity transmission utility are subject to NIL rate of GST. * In addition to the principal activity of providing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices of deposit works, the cost of services is calculated by the applicant as per the estimation methodology which includes Hard cost (material & labour), overhead charges, other charges etc. Under the deposit works, the applicant is facilitating the transmission system for the consumers/ intending agencies against recovery of the amount as per approved estimation mechanism. For facilitating such deposit work to the transmission system on the specific request of the consumers/ intending agencies, the applicant generally charges the following amount as a consideration: * Charges for modification/ augmentation/ shifting/ additions to transmission system - These are the cost incurred under deposit works requiring modification/ augmentation/ shifting/ additions to the transmission system. * Supervision Charges * Shut down charges * Modification/ augmentation/ shifting/ additions to the applicant's Transmission System on the request of consumers/ intending agencies is carried out by adopting two options/ methods:- 1. When whole work is done by the applicant itself at the requirement/ instance of the consumer/ intending agency. In this case the whole cost is incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old line at a particular trench (where modification is required) and connecting new line. The old asset/ Infrastructure (Line) is then dismantled. Therefore, practically new asset/ infrastructure is created even in case of shifting/ modification. The applicant also remains the owner of the dismantled material/ scrap. e. Being a transmission licensee under the Electricity Act 2003, the applicant will be the owner of the asset/ infrastructure built/ modified even though the cost/charges are borne by the intending agency/ consumer. f. Therefore, under both the methods/ options, the ownership of the asset/ infrastructure built/modified remains with the applicant only is being a Transmission Licensee under the Electricity Act 2003. The only procedural difference in the two methods/options is that in the first option, the complete deposit works are executed directly by the applicant with recovery of costs as per cost estimate with taxes and in the second option the work is got executed by the consumer/ intending agency under supervision of the applicant. The cost is directly incurred by the consumer/ intending agency, still the applicant is exclusively liable and responsible for mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as per sub-section 1 of Section 15 of RGST Act, 2017 would be transaction value, which is the price actually paid or payable for the said supply. b) Work executed by the consumer/ intending agency under supervision of RVPN shall as per sub-section 1 of Section 15 of RGST Act, 2017 would be transaction value which is the price actually paid or payable for the said supply to the intending agency whether by the consumer itself directly because it is immaterial who makes payment but actually work is executed on behalf of RVPN who is solely responsible to provide the above said service as per Electricity Act, 2003. c. Since the execution of works requiring modification/ augmentation/ shifting/ additions to the transmission of RVPN falls under the category of works contract, the supply is of services and accordingly the applicable GST tax rate would be equal to the rate as applicable on the supply of services. 5. FINDINGS, ANALYSIS & CONCLUSION: a. We observe that, the applicant is engaged in providing services/ facilitation to customers/ intending agencies under Deposit Works to the RVPN's transmission system in two options. Under the first option where complete work is execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks by creating Asset on one hand and Income on the other hand as a 'Consumer Contribution'. In other words we observe that even though the expenditure and the work in actual is done by the consumer / intending agency but the same will be treated as the work has been done by the applicant. d. Therefore, under both the methods/ options, the ownership of the asset/ infrastructure built/ modified remains with the RVPN only. It is also pertinent to mention here that both these cases are transactions of supply of pure services and there is no supply of goods. The only procedural difference in the two methods/options is that in the first option, the complete deposit works are executed directly by RVPN with recovery of costs as per cost estimate plus taxes and in the second option the work is got executed by the consumer/ intending agency itself (by incurring costs directly) under the supervision of RVPN with payment of supervision & other charges with taxes along with tax on the value of asset/ infrastructure built/ modified by the consumer/ intending agency itself, by treating it as value of supply of service in accordance with Section 15(2)(b) of the CGST Act 2017. e. The term ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of services as referred to in Schedule II. Schedule II (Section 7): Activities or transactions to be treated as supply of goods or supply of services: Para 5, clause (e) - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; shall be treated as supply of service. Thus in our view the act of facilitating the execution of works requiring modification/ augmentation/ shifting/ additions to the applicant's transmission system are a 'supply' of services. g. In a contract of supply of services, there are two parties, i.e. supplier of services and recipient of services. In respect of supply of goods or services, three methods of payment have been considered- by way of money, goods in kind, services in kind. Thus, consideration includes the payment in money, payment in kind through goods, and payment in kind through provision of services. In the instant case, as per applicant's view, the applicant is the supplier and the consumer/ intending agency is the recipient of service. h. In the instant case, the services of facilitating the deposit work to the applicant's transmission system on specific request of the consumer/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, in view of the above discussion, the transaction of facilitating the execution of deposit works to the applicant's transmission system at the specific request of the consumer/ intending agency amounts to 'supply' in terms of section 7 of GST Act, 2017 as the same fulfills all the essential ingredients of 'supply', more particularly when the ownership of asset remains with the applicant, the deposit work is a facilitation for the access/use of such transmission system and thus in our view such facilitation amounts to 'supply' of services. j. Therefore, in addition to supervision/ shutdown charges, by virtue of section 15(2) (b) of GST Act, 2017 the cost incurred by the consumer/ intending agency, for creating the infrastructure is also required to be included in the transaction value and to be considered as value of supply for the purpose of levy of GST. When the applicant incurred such cost, then GST would automatically be leviable on total transaction value without any recourse to section 15(2)(b) of GST Act, 2017. Accordingly, even when the cost of deposit work to the applicant's transmission system is incurred by the consumer/ intending agency itself, such c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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