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TMI Blog2024 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - SH. ASHISH VARMA AND DR. D. JAGANNATHAN, MEMBER, Represented by : Shri V Ravindran, Advocate (Passed by Tamil Nadu State Appellate Authority for Advance Ruling under Section 101 (1) of the Tamil Nadu Goods and Services Tax Act, 2017) Preamble 1. In terms of Section 102 of the Central Goods Services Tax Act 2017/Tamil Nadu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s '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: Question(s) on which, advance ruling was required 1. GST on network/wheeling charges, cross subsidy surcharge, and 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 Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondonation 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, an opportunity of personal hearing was accorded to the appellant on 23.04.2024 for the limited purpose of condonation of delay. Since the delay of one day in filing the appeal was owing to paucity of staff and also due to administrative reasons their request for condonation of delay in filing the appeal was considered and condoned vide Order-in- Appeal No. AAAR/05/2024(AR) dated 24.04.2024. 3.4 Accordingly, the appeal is now taken up for consideration on merits. Under the 'Grounds of Appeal' filed along with the application for appeal, the appellant has stated that i) The impugned order No. 122/AAR/2023 dated 19.12.2023 in para 5.6.1, has relied on the Circular dated 01.03.2018, though para 4.1 of the said circular which is relevant to the issue on hand, has been struck down by the Hon'ble High Court of Gujarat as ultra vires. Though the Department is stated to have appealed, there is no stay against the said judgement, and therefore the AAR cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023 of the Authority for Advance Ruling, Tamilnadu (AAR) under which certain activities were ruled as taxable. 4.2 The AR stated that the reasoning of the AAR in para 5.6.1 of the impugned ruling that the Hon'ble Gujarat High Court Order dated 19.12.2018 in the case of M/s. Torrent Power Ltd. , cannot be cited as a precedent, since a departmental appeal has been filed against the same, is bad in law, especially when no stay is available against the said order. The AR further stated that after the Hon'ble Gujarat High Court struck down para 4 (1) of the Circular No. 34/8/2018-GST dated 01.03.2018 as ultra vires to Section 8 of the CGST Act, 2017 and Notification No. 12/2017-CT (Rate) dated 28.06.2017, two other judgements i.e., the Hon'ble Rajasthan High Court order dated 05.02.2021 in the case of M /s. Jodhpur Vidyut Vitran Nigam Ltd., and the Hon'ble Delhi High Court order dated 13.12.2023 in the case of M/s. BSES Rajdhani Power Ltd., have been issued concurring with the decision as in M/s. Torrent Power Ltd., case. 4.3 Likewise, under para 5.6.3 of the AAR ruling, they contended that to deny exemption to impugned services under the premise that they are not natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. Firstly, it is stated that the These charges may have nexus with supply of electricity, but then they are not naturally bundled . Once it was found by the ARA that the services (for which these charges are collected) are having nexus with the supply of electricity, it is not appropriate for that authority to say the same are not naturally bundled, in the cases cited above. The ARA could have even sought for from the applicant/appellant or obtained independently, a Chartered Engineer's certificate in this regard. iv) Further, the observations viz., Moreover we also notice that independent suppliers can also provide these services separately, in which case these services can never be termed as composite supply as they are not naturally bundled with the main service , are beyond the issue raised in the application seeking advance ruling. The application sought as to the exigibility to GST, the activities which the applicant/appellant was carrying out and for which the fees/charges were being collected by them. v) The appellant therefore prayed that the advance ruling, in so far as it relates to the above 17 activities concerned, may be set aside and the present appeal ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n merits. In this regard, they undertook to famish additional written submission by the end of the day, on this issue. 4.9 As undertaken, the AR furnished the additional written submissions on 29.05.2024, wherein the following points were presented before the Appellate Authority for Advance Ruling for consideration, viz.,- 1. After hearing the appellant in detail on 14.05.2024 and taking on record the written submissions submitted during the hearing, the Hon'ble AAAR has issued a communication dated 24.05.2024, wherein it is observed that the Hon'ble High Court's judgment in Torrent Power case has not been accepted by the department and a SLP has been filed and that the Supreme Court after condoning the delay has granted leave in the said case and because of this the matter becomes sub-judice and no decision could be made at this stage. Yet, the Hon'ble AAAR has granted a personal hearing on 29.05.2024 in this regard, again. 2. It is already a fact on record that the Advance Ruling Authority in its Ruling No. 122/AAR/2023 dated. 19.12.2023 [Impugned ruling in the present appeal] had observed that because of the department's SLP, the ratio of the decision in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e advance ruling given by the Authority can be appealed before an Appellate authority for Advance Ruling (AAAR). There are timelines prescribed for passing an order by AAR and by AAAR . 6. It is again respectfully submitted that in the communication dated 24.05.2024, while affording personal hearing again on 29.05.2024, it is observed that ...no decision could be made at this stage. It is submitted that the provisions of Sec. 101 of the GST Acts cited above or any Board's circulars/instructions, do not give any scope for keeping any appeal in call book on account of department's appeal against a High Court order. In other words, it is submitted that Lis pendens is not one ground provided for under the GST Acts not to decide the issue on merits. 7. It is respectfully submitted that it would not be predictable as to when the Hon'ble Supreme Court would decide the SLP in question, pending before. It may well take long years. That however cannot take away the mandate in Section 101 of the GST Acts. It is therefore further submitted that in the backdrop of the highlights of the scheme of Advance Ruling explained by the Board through the E-flier extracted above, it is respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AAR, after holding that the following charges are exempt from GST,- (i) Belated payment surcharge, (ii) Dishonoured cheque service charge, and (iii) Network/Wheeling charges all other charges for which advance ruling was sought originally by the appellant, were found to be liable to GST, based on the discussions as in paras 5.6.1 and 5.6.3 of the impugned order. As we find that the instant appeal is only against the ruling extended in respect of those services that were held as liable to GST, we restrict our discussion and analysis to the same. 5.3 Accordingly, we find that in para 5.6.1 of the impugned order, the AAR after discussing the contents of para 4 (1) of the Circular No. 34/8/2018-GST dated 01.03.2018, has reasoned that the intention of the circular is to keep away those services which are only ancillary in nature and not closely or directly in relation to transmission or distribution of electricity from being exempt from GST. In this regard, it is also seen that the Applicant has relied on the decision of the Hon'ble Gujarat High Court, in an identical issue in the matter of Torrent Power Ltd. Vs UOI [Order dated 19.12.2018 in R/Special Civil Application No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xiv) Temporary disconnection at the request of the consumer xv) Additional surcharge xvi) Tariff change xvii) Cross subsidy surcharge 5.5 Reverting back to the issue in hand, we observe that Sl. No. 25 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017, exempts the intra-State supply of services of description as specified in column (3) of the Table annexed thereto, i.e., Sl.No. Chapter, Section, Heading, Group or Service code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 25 Heading 9969 Transmission or distribution of electricity by an electricity transmission or distribution utility NIL NIL Therefore, the appellant, M/s. Tamilnadu Generation and Distribution Corporation Limited, being a Distribution licensee', in terms of the Electricity Act, 2003, is exempted from the supply of 'services of distribution of electricity'. As per their submissions, in the course of providing service for distribution of electricity, they also provide other services for which they collect charges as detailed in para 3.1 above. 5.6 In this regard, the clarification issued by the CBIC, in relation to query 4 (1) of the Circular No. 34/8/2018-GST da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on grant special leave to appeal from any judgment, decree determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India, as per Article 136 of the Constitution of India. 5.8 It is ascertained that in the case of M/s. Torrent Power Ltd., the Hon'ble High Court's order dated 19.12.2018 has not been accepted by the Department, and a SLP(C) No. 019431/2019 (Diary No. 24733 of 2019 ) has been filed before the Hon'ble Supreme Court. The Supreme Court after condoning the delay has granted leave on 9.08.2019 in the said case, and the appeal filed under CA No. 006278/2019 (Diary No. 24733/2019) is pending decision before the Hon'ble Supreme Court, whereby the matter becomes sub-judice at this stage, whether with a stay or otherwise. We would like to highlight here that the issue involved in the instant case is being widely discussed/contested throughout the country, as confirmed by the appellant themselves through their submissions that two other judgements i.e., the Hon'ble Rajasthan High Court order dated 05.02.2021 in the case of M/s. Jodhpur Vidyut Vitran Nigam Ltd., and the Hon'ble Delhi High Court ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption on the services of 'transmission or distribution of electricity' are also taken up for analysis, and it is seen that:- Notification No. 11/2010-ST dated 27.02.2010 - exempts the taxable service provided to any person, by any other person for transmission of electricity, from the whole of service tax leviable thereon. Notification No. 32/2010-ST dated 22.06.2010 - exempts the taxable service provided to any person, by a distribution licencee, a distribution franchisee, or any other person for distribution of electricity, from the whole of service tax leviable thereon. Notification No. 45/2010-ST dated 20.07.2010 - service tax payable on all taxable services relating to transmission (upto 26.02.2010) and distribution (upto 21.06.2010) of electricity, shall not be required to be paid, during the aforesaid period. Section 66D of the Finance Act, 1994 (Negative List) - The negative list shall comprise of the following services, namely :- k) transmission or distribution of electricity by an electricity transmission or distribution utility. Notification No. 12/2017-CT(Rate) dated 28.06.2017 - Sl. No. 25 - Supply of services of Transmission or distribution of electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in respect of the period prior to the issue of Notifications No. 11/2010-ST dated 27.02.2010, and No. 32/2010-ST dated 22.06.2010, services relating to transmission and distribution of electricity were liable to service tax. As a practice was generally prevalent during the said period involving non-levy of service tax on such services, the Central Government in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the said Finance Act, have extended the said benefit, but only upto the day prior to the issue of Notifications No. 11/201 O-ST dated 27.02.2010, and No. 32/2010-ST dated 22.06.2010. 5.12 Accordingly, we note that the various legal provisions relating to exemption from payment of taxes on services involving transmission or distribution of electricity during the 'pre-Negative List era', Negative List era', and the 'GST era' at present, are only for the services of transmission of distribution of electricity', and not in respect of the services 'related to' it. Even the Notification No. 45/2010-ST dated 20.07.2010, exempting services relating to transmission or distribution of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same as that of M/s. Torrent Power Ltd., is pending decision before the Hon'ble Supreme Court. 5.15 In this regard, we observe that the first proviso to Section 98 (2) of the CGST Act, 2017, reads as, Provided that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. We find that as per the appellant's argument, their application is liable to be admitted in as much as no case is pending before the Hon'ble Court in the name of the applicant on the issue in hand. In this context, we find that the term 'applicant' is defined under Section 95(c) of the Act, which means any person registered or desirous of obtaining registration under this Act , which goes to prove that the definition of 'applicant' is not restricted to provisions related to Advance Ruling alone, and that the definition is meant to cater to the entire Act. Further, we notice that English has two articles, 'the' which is called definite article and 'a/an' which is indefinite article. While the article 'the' is use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges may have nexus with supply of electricity, but then they are not naturally bundled , and accordingly prayed that the advance ruling, in so far as it relates to the above 17 activities concerned, may be set aside and the present appeal may be allowed, in view of the specific coverage of the issue under the Court rulings cited above. In this regard, we observe that the AAR has rightly reasoned out while arriving at the decision, stating that the services mentioned therein can never be termed as 'composite supply', and that they are not naturally bundled with the principal supply, i.e., transmission/ distribution of electricity, as the main supply may take place without the said ancillary charges. Notwithstanding the same, we notice from the 'Grounds of Appeal' filed by the Department, that the appeal is on both counts, i.e., services in relation, to transmission and distribution of electricity, which are not covered under Sl. No. 25 of the exemption Notification No. 12/2017, dated 28.06.2017, and also in respect of the services that cannot be termed as 'composite' in nature to the principal supply of transmission and distribution of electricity as lai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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