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TMI Blog2020 (4) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... e supply and, therefore, the tax liability thereof has to be determined by treating the same different from the supply of transmission and distribution of electricity - The rate of GGST on aforesaid services shall be also 9% as per the corresponding Notification to the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under GGST Act, 2017. Taxability - amount recovered from consumers as other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc., towards expenses incurred in providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity - HELD THAT:- Pro-rata charges are recovered by them considering the augmentation to be carried out at the upstream sub-station and augmentation of existing substation. Other charges like as pro-rata charges, proportionate line charges, registration fees, operation and maintenance charges etc. recovered by GETCO from its various consumers are nothing but the consideration to enable them to create future assets for the mandate it is given. Thus, GETCO recovers said charges for providing electric line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST. 2.1. The Applicant, vide Annexure B C sheet to their application dated 08.02.2018, has submitted the Statement of Facts, which are as follows: A. STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS ON WHICH THE ADVANCE RULING IS REQUIRED; i). The Applicant is a Company incorporated under the Companies Act, 1956, which was promoted by the erstwhile Gujarat Electricity Board and is also holder of Registration certificate bearing No. 24AABCG4029R2ZC. ii). In exercise of powers conferred under Section 39(1) of the Electricity Act, 2003, the Gujarat Government, by Notification No.GHU-2004-31-GEB-l 1042946-K dated 29th May 2004, notified the Applicant (GETCO) as State Transmission Utility (STU) with effect from 1st June 2004. Accordingly, the Applicant is a State Transmission Utility (STU) , as defined under Section 2(67) of the Electricity Act, 2003 read with Section 39(1) of the said Act. iii). As a State Transmission Utility (STU), the Applicant supplies the Service of Transmission of Electricity to consumers. iv). As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso recovered from the consumer for maintaining and operating of constructed assets of GETCO as per the Gujarat Electricity Regulatory Commission s Regulations. x). The Supply of Service of Transmission of Electricity by State Transmission Utility is exempted from the levy of Central GST vide Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 as well as from the levy of Gujarat State GST vide Sr. No.25 of Notification No. 12/2017-State Tax (Rate) dated 30th June 2017. B. Statement Containing the Applicant s interpretation of Law or Facts as the case may be in respect of the Questions on which Advance Ruling is required: i). The Applicant, who is a State Transmission Utility within the meaning of Section 2(67) of the Electricity Act 2003 read with Section 39(1) of the said Act, supplies the Service of Transmission of Electricity . ii). For the supply of the service of Transmission of Electricity under nondiscriminatory open access to consumers, construction/erection of Bays / Sub-Stations , Overhead Lines and Underground cables is required to be carried out. Where the consumers do not themselves arrange to have such constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction/erection in addition to the Transmission charges, is exempt from GST and accordingly no GST is payable on the said cost of construction/ erection recovered from the consumers to whom the supply of service of Transmission of Electricity is made by the Applicant. v. Except the supply of service of Transmission of Electricity , no other supply of any goods or service is made by the Applicant to the consumer. As submitted herein above, the Bays/Sub-Stations, Overhead Lines and Cables which are constructed/erected for the purpose of supply of service of Transmission of Electricity vest in the Applicant and are the property/assets of the Applicant. Thus, there is no supply other than supply of service of Transmission of Electricity to the consumer and the supply of service of Transmission of Electricity is exempt from GST. vi). In the circumstances, no GST is payable by the Applicant. 3. Further, the Applicant, vide their letter Ref. No. GETCO/GM(F A)/Advance Ruling/379 dated 20.04.2018 submitted their written submission of the personal hearing proceedings conducted on 12.04.2018 where arguments were canvassed by their counsel namely Mr. Jaideep C. Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the cost of construction/ erection is borne by and recovered from the consumer, the Bays/ Sub-stations, Overhead Lines, etc so constructed/erected vest in the Applicant and are the property/assets of the Applicant. There is no question therefore of the Applicant having rendered any construction service to the consumers. What is constructed by the EPC contractors becomes the property of the Applicant and not of the consumer and hence there is no question of the Applicant having rendered any construction service to the consumer. (x) In terms of Section 15 (1) of the Central Goods and Services Tax Act 2017, the value of supply of a service shall be the transaction value, which is the price actually paid or payable for the supply of service when the supplier and recipient are not related and price is the sole consideration for the supply. Further, Section 15 (2) (b) of the said Act provides that the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and is not included in the price actually paid or payable for the supply of the service. Further, Section 15 (2) (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is exempt from GST. DISCUSSION AND FINDINGS: 4. We have carefully gone through the application dated 08.02.2018 filed for advance ruling, written submission dated 12.04.2018 of the Applicant and the comments of the jurisdictional authority. 5. The applicant has sought for advance ruling for the following query: Whether or not the cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of Transmission of Electricity under Section 15 of the Central Goods and Service Tax Act, 2017 and since the said service is exempted from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 and Notification No. 12/2017-State Tax (Rate) dated 30th June 2017, the same are not liable to GST. 6. We find that the Applicant is a Government Company and is notified as a State Transmission Utility under Section 39(1) of the Electricity Act, 2003. As a State Transmission Util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers 8. We find that the applicant is doing a facilitation work on behalf of its consumers for providing facilities of creating assets for and on behalf of their consumers to enable their consumers to obtain their desired electricity in relation to transmission of electricity. Here, the facilitation work done by the applicant for consumers is the construction/erection of Bays/Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof . Thus, the applicant constructs a dedicated transmission line to the point of connection to enable connectivity to the grid for and on behalf of their consumers. As per the provisions of the Electricity Act, 2003 and GERC Regulations, the applicant recovers the actual cost of such construction/ erection along with applicable supervision charges from consumers. Thus, the applicant has supplied the services by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the premises of the consumers for a consideration (the actual cost of such construction/ erection along with applicable supervision charges) in the course or furtherance of business. 9. We also fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k up to the premises of the consumers in the course or furtherance of business. Hence, said exemption is not available to the applicant. 11. It is very pertinent to note that the said construction/erection of Bays/Sub-Stations, Overhead Lines, Underground cables, etc. or part thereof are optional services and one may or may not choose to avail these additional services. Hence, these services cannot be said to be naturally bundled and there is no composite supply. Each service is unique, different, not inter dependent on each other and is optional. Further, these construction services are to be provided prior to the supply of Transmission of electricity and are not naturally bundled and supplied in conjunction with each other in the ordinary course of business. Therefore, it cannot be construed that the same is in conjunction with the supply of Transmission of electricity and a composite supply as defined in Section 2(30) of the Central Goods and Services Act, 2017, which reads as under: (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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading 9954 (Construction services) (xii) Construction services other than (i), (ii),(iii),(iv), (v), (vi), (vii), (viii), (ix), (x) and (xi) above. 9 - 12.2 The rate of GGST on aforesaid services shall be also 9% as per the corresponding Notification to the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under GGST Act, 2017. 13. Now, we discuss about taxability of the amount recovered from consumers as other charges viz. Pro-rata charges, Proportionate line charges, Registration fees and Operation and maintenance charges etc., towards expenses incurred in providing electric line or electrical plant or other facilities for the purpose of giving the supply of electricity. We find that as per regulation 3 of the Notification No.9 dated 31.03.2005 issued by Gujarat Electricity Regulatory Commission (GERC), every Distribution Licensee is allowed to recover from the applicant, requiring supply of electricity, any expenses that the Distribution Licensee shall be required to reasonably incurred to provide any electric line or electrical plant specifically for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity to them, which are ancillary services provided in relation to service of the transmission of electricity. Electricity charges recovered for consumption of electricity are only exempted under above entry. Amount collected towards other ancillary services are taxable under GST. These services are, therefore, taxable under GST under the residual category of services i.e. 999799- Other services n.e.c. and, hence, GETCO is liable to pay GST @ 18% (CGST @9% and SGST@9%) on aforesaid other charges recovered from its consumers. 13. In view of the foregoing discussion, we rule as under R U L I N G Question : Whether or not the cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges, recovered by the Applicant from the consumers, forms part of the value of supply of service of Transmission of Electricity under Section 15 of the Central Goods and Service Tax 2017 and since the said service is exempt from GST under Sr. No.25 of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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