GST
TRT-2025-
AAR Karnataka
Date:-17-02-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date: 17 February 2023
Facts –
- The Applicant, M/s. Chamundeshwari Electricity Supply Corporation Limited is engaged in distribution of electricity and sale of energy.
Issue –
- What is the GST implications on various questions asked by the applicant?
Orders –
- The authorities observed that the applicant states that Government of Karnataka holds 99.99% of equity in the applicant company and is established by the Government of Karnataka.
- However, Article 243W of the Constitution and Twelfth Schedule to the Constitution relating to the functions entrusted to a Municipality is verified and found that the supply of electricity is not covered. Article 243G of the Constitution and Eleventh Schedule to the Constitution relating to the functions entrusted to a Panchayat is verified and found that the Rural Electrification including the distribution of electricity is covered. But the applicant company is not set up or established only to provide Rural Electrification and Applicant is not a Governmental authority for the purposes of Notification No. 12/20 17- Central Tax (Rate) dated 28.06.2017.
- Further, as per the second proviso of the Section 44 of the CGST act, it is seen that the same is applicable only to a department of Central Government or State Government or to a local authority. The applicant is a company fully owned by the Government of Karnataka and hence this proviso for non-requirement to file annual return is not applicable to the applicant.
- An open access consumer receiving electricity from a person other than the distribution licensee of his area of supply, shall have to pay to the distribution licensee an additional surcharge to meet the fixed cost of such distribution licensee arising out of his obligation to supply. Further, the applicant is collecting the above charges as provided by statue incurred by CESC towards power purchase from open access consumers who have moved out of CESC to procure power from independent generators. This is nothing but a charge levied for tolerating an act which is a supply under section 7(1) of the CGST Act and hence is taxable under GST Act.
- Entry No. 25 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 states that “Services of transmission or distribution of electricity by an electricity transmission or distribution utility”. Hence the wheeling charges collected is for the services of transmission of electricity and hence is covered under this entry and hence exempted from the levy of tax under the GST Act.
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