GST
TRT-2025-
Delhi High Court
Date:-15-01-25
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 15 January 2025
Parties: Central Electricity Regulatory Commission Vs Additional Director, Directorate General of GST Intelligence (DGGI) & Anr.
Facts –
- The Petitioner, Central Electricity Regulatory Commission (CERC), was served with a show cause notice demanding GST on fees collected by the regulatory body for tariff determination, licensing, and other regulatory functions.
- They argued that regulatory fees collected are not in the course of business and should not be subject to GST. The respondents classified the commissions’ regulatory activities under “support services to electricity transmission and distribution” and imposed an 18% GST.
Issue –
- Whether GST is leviable on Fees collected by the regulatory body for tariff determination, licensing, and other regulatory functions?
Order –
- The Divisional Bench of Hon’ble High Court observed that by virtue of Section 7, a supply would necessarily have to be of goods or services not only for consideration but more importantly in the course or furtherance of business. Further the regulatory function discharged by Commissions would clearly not fall within the scope of the word “business” as defined by Section 2(17). Thus, even if the fee so received by such Commissions were to be assumed as being consideration received, it was clearly not one obtained in the course or furtherance of business.
- Section 2(102) of the CGST Act defines the expression “services” to mean “anything other than goods”, the expansive reach of that definition would have to necessarily be read alongside Schedule III and which excludes services per se rendered by a court or tribunal established under any law. The provision made in Schedule III is clearly intended to insulate and exempt the functions discharged by a court or tribunal from the levy of a tax under the CGST.
- The Electricity Act makes no distinction between the regulatory and adjudicatory functions which it vests in and confers upon a Commission. Those functions are placed in the hands of a quasi-judicial body enjoined to regulate and administer the subject of electricity distribution. Electricity, undoubtedly, is a natural resource which vests in the State.
- Hence the appeal is allowed.
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