Order Date – 13 July 2023

Facts – 

• The Applicant, M/s. Chamundeswari Electricity Supply Corporation Ltd., is engaged in sale of energy and transmission and distribution of electricity. They are going to set up various public charging stations (PCS} on its own, for charging electric vehicles (EVs), both two- wheelers and four-wheelers.
• The Applicant will issue tax invoices and collects ‘Electric Vehicle Charging Fee”. It includes two components — (a) 'Energy Charges’, and (b) ‘Service Charges'. 

Issue – 

• Whether the charging of electric battery is an activity amounting to supply?

Order – 

• The AAR observed that in the instant case, it is admitted that the Public Charging Stations (PCS) proposed by the applicant do not have licence as required under the Electricity Act, 2003 and the consumer lacks any premises for transmission through a service line or otherwise.
• The owner of the Electric Vehicle is being allowed to use the infrastructure/facilities that are provided by the charging station and therefore the said activity amounts to supply of service, for which the applicant admittedly collects Electric Vehicle Charging Fee as consideration. Thus the impugned activity amounts to supply of service in terms of Section 7(1)(a} read with Section 2(102) of the CGST Act 2017.
• Further, the Ministry of Power, Government of India, New Delhi vide their letter No.23/08/ 2018-RTR dated 13.04.2018 issued a clarification on charging infrastructure for Electric Vehicles with reference to the provisions of the Electricity Act 2003, and the charging stations do not require  a licence  for  charging the battery of an EV and thus the said stations are not involved  in transmission, distribution or trading  of  electricity. Therefore, even on this count also the impugned activity amounts to supply of service.
• The Electrical Vehicle contains a motor to rotate the wheels that functions out of the energy sourced through the battery and thus the said vehicle qualifies to be a motor car. Thus charging the batteries of such electric vehicles amounts to charging of the batteries of motor cars and thus the impugned activity squarely gets covered under SAC 998714. Further Notification No. 11 /2017-Central Tax (Rate) dated 28.06.2017, as amended, prescribes GST rate of 18% (CGST-9% and KGST-9%) vide entry number 25(ii) for the impugned activity/ service.

#Need for GST in India