Order Date – 11 July 2023

Facts – 

• The Applicant, M/s Tata Power Delhi Distribution Limited, is engaged in providing various 'Consumer Funded Jobs' such as creating new connections for supply of electricity, load enhancement/ augmentation, electrification of un-electrified area, pole shifting, conversion of overhead lines into underground cables etc. at the specific request of its customers.
• The principal business of the Applicant is transmission and distribution of electricity. Section 46 of Electricity Act, 2003 empowers the applicant to recovers the expenses reasonably incurred in executing the above said activities.

Issue –

• Whether input tax credit (ITC) for capital goods, input and input services are available to the applicant in undertaking “consumer funded jobs”?

Order -

• The AAR observed that in order to discharge main responsibility of distribution of power to the consumers it is essential for the applicant to have a network of transformers connected by electrical wires, sub-stations, electricity meters and other equipment. Here, the applicant has admitted that the inputs such as cables, sub-stations etc. are inputs for its principal supply "Electricity Transmission and Distributions" and has no connection with the supply of services such as New Electricity Connections, Load enhancement etc.
• Further, services other than the services of Electricity Transmission and Distribution" provided by the applicant to its customers in addition to the principal supply of “Electricity Transmission and Distribution”. The inputs as stated by the applicant appears to be the expenses incurred for creation infrastructure for electricity transmission. Hence, the inputs used for creating infrastructure for electricity transmission cannot be held to be used in the Business of taxable supply.
• It was also found that the Uttar Pradesh Authority for Advance Ruling, in the case of Uttar Pradesh Power Transmission Corporation Ltd. vide order No. 37 dated 05.08.2019 in the similar issue ruled that the applicant is not eligible to claim Input Tax credit in respect of creating infrastructure for electricity transmission.
• Hence it was held that input tax credit (lTC) for input and input services is not available to the applicant in undertaking "consumer funded jobs"

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