GOVT. CAN NOT CHARGE GST ON POWER SERVICES-RAJASTHAN HIGH COURT

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GOVT. CAN NOT CHARGE GST ON POWER SERVICES-RAJASTHAN HIGH COURT

27/02/2021

GOVT. CAN NOT CHARGE GST ON POWER SERVICES-RAJASTHAN HIGH COURT

1. The petitioner is a Public Sector Undertaking engaged in distribution and supply of electricity in various Districts of Rajasthan.

2. According to the petitioner, the services of distribution and supply of electricity fall in negative list of the services as declared by the Central Government vide Notification No.12/2017 dated 28.06.2017.

3. The petitioner has challenged Circular dated 01.03.2018, particularly Clause 4(1) thereof, which was issued by the Department of Revenue on the basis of recommendations of GST Council made in its meeting held on 9th, 10th and 13th January, 2018. It is to be noted that by way of this clarification following services provided by the DISCOMS have been held to be taxable:-

(i) application fee for releasing connection of electricity;

(ii) Rental Charges against metering equipment;

(iii) Testing fee for meters/ transformers, capacitors etc.;

(iv) Labour charges from customers for shifting of meters or shifting of service lines; and

(v) charges for duplicate bill.

4. Mr. Anjay Kothari, learned counsel for the petitioner argued that by way of statutory notification dated 28.06.2017, issued in exercise of powers under Section 11(1) of the Central Goods & Services Tax Act, 2017 (hereinafter referred as as “the CGST Act”), the Central Government has exempted services of transmission or distribution of electricity, as such, the circular impugned carving out an exception and excluding some of the services, which are essential and integral part of the main function of supply and distribution of electricity is arbitrary.

5. He further argued that once the parent exemption Notification exempts the very supply and distribution of electricity, the Department of Revenue or even CGST Council cannot exclude certain services by way of clarificatory circular. He added that all the services enumerated in para No.3 above are nothing but a part of complete package/bundle of services, namely supply and distribution of electricity.

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