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TMI Blog2024 (9) TMI 1542X X X X Extracts X X X X X X X X Extracts X X X X ..... d on it by the respondents, though another department i.e., Central Excise Department of the Government, has taken a diametrical opposite view, pending further orders, there shall be interim stay of all further proceedings pursuant to Annexure P-1, dt. 14.06.2024. List on 18.11.2024. - M.S. RAMACHANDRA RAO CHIEF JUSTICE AND SATYEN VAIDYA JUDGE Present: For the Petitioner : Mr. B.L. Narasimhan, Advocate (through video conferencing) Ms. Shreya Khunteta, Mr. Amrinder Singh, Ms. Shradha Karol and Mr. Vaibhav Chauhan, Advocates,. For the Respondent no. 4 : Mr. Sunish Bindlish, Advocate with Ms. Ridhi Bansal Ms. Sidhi Bansal, (through video conferencing), Mr. Vishal Singh Thakur and Ms. Lalita Sharma, Advocates,. CWP No. 10471/2024 CMP No. 17439 /2024 Notice be issued to respondents no. 1 to 3 and 5 to 8, returnable for 18.11.2024, on taking steps within one week. Mr. Vishal Singh Thakur, Advocate, accepts notice on behalf of respondent no.4. 2) In this Writ petition, petitioner has questioned the impugned order dt. 14.06.2024(Annexure P-1) passed by 2nd respondent confirming the demand of CGST and SGST/UTGST under Section 74 (9) of the CGST Act, 2017 read with corresponding Section 74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST Act (referred to supra) as to whether supply of free power @ 12% as compensation to the respective states where distress is caused by setting up the hydro power projects , can be subjected to Service Tax or GST. 8) In the impugned order it has been held that supply of free power is nothing but consideration towards licensing services rendered by the State Governments. The correctness of this view is assailed in the Writ Petition. We shall deal with this issue at a later point of this order. 9) The Regulations framed by the Central Electricity Regulatory Commission for the period 01.04.2014 to 31.03.2014 titled CERC (Terms and Conditions of Tariff) Regulations, 2014 (Annexure P-7) provide for regulating the tariff of a power generating company. In Regulation 42,they provide for payment of capacity and energy charges by the beneficiaries in proportion to their saleable capacity, and the saleable capacity has to be determined under those regulations after deducting the capacity corresponding to free power to home state which is fixed at 13% or actual, whichever is less vide Note 2 to Regulation 42. 10) This is also reiterated in guidelines contained in Annexure I to the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t The J K Govt. will get 12% power free of cost. I further find that Ministry of Energy, Department of Power, Government of India vide letter No. 16/46/86-DO(NHPC)(Vol.II) dated 1 November, 1990 has issued clarification regarding formula for sharing of benefits from Central Sector HE projects. I find that the said letter dated 1.11.1990 of Deputy Secretary to the Govt. of India, interalia, speaks that 12% of power from the energy generated by the power station would be supplied free of cost to those states of the region (including the state where the hydro-electric project is located) where distressed is caused by setting up the project at the specific site, like submergence, dislocation of population, the allocation being made in proportion to the extent of such distress. This letter/ Memorandum of Ministry of Energy, Department of Power, Govt. of India clearly provides that the energy generated figures for the purpose would be calculated at after discounting auxiliary consumption but without taking into account the transmission line losses and the extent of distress caused would be assessed for purpose of allocation of 12% free power by the Central Electricity Authority in consul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not come at the cost of India's invaluable natural capital, particularly the forests. Therefore, a payment in the form of Net Present Value, Compensatory Afforestation Charges and other such site specific charges are required to be paid to make good the damage caused by such user agency. In the process, application for non-forestry use of forest land is made by the user agency to Ministry of Environment Forest, Govt. of India, and final approval for such non-forestry use of such forest land is given by Ministry of Environment Forest, Govt. of India, on payment of specified charges as mentioned above and after receiving recommendation of the concerned State Government. (emphasis supplied) 12) Thus, it was concluded by the Department that the 12% free power supplied by the petitioner to the respective States is akin to compensation because distress is caused by setting up the hydroelectric project and the same cannot be treated as royalty. In the said order reliance was placed on previous decisions of CESTAT Benches as set out above. 13) Petitioner places strong reliance on this order and contends that since the respondents dealing in GST are also under the same Ministry of Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra (2000) 7 SCC 640. 22) As already mentioned in para 3 supra the petitioner has a registered office in the State of Himachal Pradesh and in the impugned order , a liability qua the power stations run by the petitioner in the State of Himachal Pradesh , which is more than Rs. 100 crores, is imposed. So part cause of action undoubtedly arises within the territorial jurisdiction of this Court. 23) Of course this issue also requires a detailed examination in the Writ petition after the pleadings are complete. 24) However, prima facie, we find force in the contentions of the petitioner that GST is levied on supply of goods and services in lieu of consideration ; that there a serious doubt as to whether the supply of free electricity is in the nature of consideration at all in order to subject it to GST or it is a compensation for distress caused by setting up of the Hydro electric Project ; and that the respondents cannot impose GST on free electricity provided by the petitioner by treating the same as consideration towards the alleged services provided by the State Government as a supplier. 25) Also taking into account the fact that the petitioner is a Government Company and huge lia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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