Recently Gujarat High Court ([TS-858-HC-2018(GUJ)-NT-Torrent Power Ltd]) has held that when a company is engaged in the business of supply and distribution of electric power which is principal supply,\u00a0the ancillary and related supply such as application fee for release of connection,\u00a0meter testing fees,\u00a0rental charges against meter equipment\/transformers capacitors, fees for shooting of meters or lines, charges for duplicate bills, shall\u00a0also not be liable for GST.<\/p>\n

Though Government vide its circular no.34 dated 1st March, 2018, clarified that the services by way of transmission or distribution of electricity by an electricity transmission or distribution utility is only exempt from GST under notification No. 12\/2017- CT (R), Sl. No. 25. The other services such as, –<\/p>\n

\n
1. Application fee for releasing connection of electricity;<\/li>\n
2. Rental Charges against metering equipment;<\/li>\n<\/ol>\n

   iii. Testing fee for meters\/ transformers, capacitors etc;<\/p>\n

   \n
   1. Labour charges from customers for shifting of meters or shifting of service lines;<\/li>\n
   2. charges for duplicate bill;<\/li>\n<\/ol>\n

      Provided by DISCOMS to consumer are taxable.<\/p>\n

      Also, it is noteworthy to state that AAR Rajasthan in the matter of\u00a0M\/s TP Ajmer Distribution Limited\u00a0[TS-263-AAR-2018-NT] relying upon the Circular issued on 1^{st<\/sup>\u00a0March 2018 also held that transmission\/distribution of electricity alone shall be exempt in terms of\u00a0Notification No. 12\/2017-Central Tax (Rate)\u00a0and non-tariff charges recovered from customers would be taxable.<\/p>\n}

      High Court observed that prior to the coming of the negative list regime of the service tax laws (i.e. before 01.07.12), the Central Government by virtue of\u00a0Notification No. 11\/2010 dated 27.02.2010\u00a0exempted transmission of electricity service from the whole of the service tax leviable thereon and by virtue of\u00a0Notification No. 32\/2010 dated 22.06.2010\u00a0distribution of electricity came to be exempted from the whole of the service tax leviable thereon. Thus what was exempted from service tax under those provisions was transmission and distribution<\/p>\n

      of electricity. Despite this, the revenue authorities had considered services related to transmission and distribution of electricity as exempt from service tax by virtue of those notifications. In so far as electricity meters are concerned, vide\u00a0circular No. 131\/13\/2010-ST dated 7.12.2010, it was clarified that supply of electricity meters for hire to consumers being an essential activity, having direct and close nexus with transmission and distribution of electricity, the same is covered by the exemption for transmission and distribution of electricity extended under the relevant notifications.<\/p>\n

      The meaning of \u201ctransmission and distribution of electricity\u201d does not change either for the negative list regime (i.e. after 01.07.2012) or the GST regime (i.e. after 01.07.2017). If that be so, the services which stood included within the ambit of transmission and distribution of electricity during the pre-negative list regime cannot now be sought or excluded by merely issuing a clarificatory circular, that too, with retrospective effect.<\/p>\n

      These supplies are naturally bundled supply so as to fall within the realm of composite supply within the meaning of Sec 2(30) of GST Act.\u00a0 The principal supply of “transmission and distribution of power” and the ancillary services such as meter charges go hand in hand with each other and are naturally bundled services. Hence, when principal supply is exempt then ancillary supply shall\u00a0also be exempt from levy of GST.<\/p>\n

      However, in the present discussion, the definition of composite supply as given in section 2(30) of the CGST Act,2017 is worth noting which reads as follows:-<\/p>\n

      \u00a0\u201ccomposite supply \u201d means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both<\/u><\/strong>, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.\u00a0<\/em><\/p>\n

      As per definition of \u201ccomposite supply\u201d, it can be inferred that it is combination of tow or more taxable supplies and the combination should not include exempt supplies. However, it is pertinent to mention that the government itself has clarified vide Circular No. 32\/06\/2018-GST dated 12.02.2018<\/em><\/strong> that food supplied to in-patients as advised by the doctor\/nutritionists is a part of composite supply of healthcare<\/p>\n

      services and not separately taxable. The above clarification indicates that the composite supply can be combination of exempt and taxable supplies as well.<\/p>\n

      Moreover, it has been consistently been held by various Advance Ruling Authorities that health care services provided in package including stay facility, medicines, surgical implants, food etc. is composite supply wherein principal supply is that of health care services which is exempt from GST. Reliance may be placed on the decision given in the case of CMC VELLORE ASSOCIATION [2020 (32) G.S.T.L. 601 (A.A.R.-GST-TN] <\/em><\/strong>and BABY MEMORIAL HOSPITAL LTD. [2020 (32) G.S.T.L. 59 (AAR-GST-KERELA]. <\/em><\/strong><\/p>\n

      Therefore, the decision pronounced by Hon\u2019ble Gujarat High Court in the case of Torrent Power Ltd. is a remarkable judgement thereby relieving number of taxpayers\u2019 particularly DISCOM companies and consumers from payment of GST on ancillary services availed in connection with supply of electricity.<\/p>\n

      This is solely for educational purpose. <\/em><\/p>\n

      You can reach us at www.capradeepjain.com<\/a> , at our facebook page on https:\/\/www.facebook.com\/GSTTODAYBYPRADEEPJAIN\/<\/a> as well as follow us on twitter at https:\/\/www.twitter.com\/@capradeepjain21<\/a> .<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

      Recently Gujarat High Court ([TS-858-HC-2018(GUJ)-NT-Torrent Power Ltd]) has held that when a company is engaged in the business of supply and distribution of electric power which is principal supply,\u00a0the ancillary and related supply such as application fee for release of connection,\u00a0meter testing fees,\u00a0rental charges against meter equipment\/transformers capacitors, fees for shooting of meters or lines, … Read more<\/a><\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[15,3],"tags":[29],"class_list":["post-4840","post","type-post","status-publish","format-standard","hentry","category-gst","category-type","tag-exemption"],"yoast_head":"\n