Order date: 21 July 2025

CENTRAL ELECTRICITY REGULATORY COMMISSION Vs THE ADDITIONAL DIRECTOR DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI) & ANR

Facts

• CERC and DERC received GST Show Cause Notices for non-payment of tax on regulatory fees (tariff, license, filing, etc.).
• Authorities treated these as taxable “support services” under SAC 998631, demanding over ₹112 crores in IGST.
• They claimed the Commissions were engaged in “business” and liable to GST registration.

Issue

• Whether regulatory fees collected by statutory electricity commissions for performing their statutory functions are liable to GST as taxable services.

Order

• The Court dismissed revenue SLP and uphold New Delhi High Court decision that the functions of CERC and DERC are statutory and regulatory, not commercial, and hence do not constitute a “business” under GST law.
• Regulatory commissions perform quasi-judicial functions and have the trappings of a tribunal, bringing them within the exclusion under Schedule III of the CGST Act. Further, there is no valid basis to distinguish between regulatory and adjudicatory roles for the purpose of GST applicability.
• The Court observed that fees collected by the Commissions are not consideration for a commercial supply but are in discharge of public functions mandated by statute. The classification of such activities under SAC 998631 as “support services” is incorrect and inapplicable in this context. Also, a GST notification cannot override the statutory exemption provided under Schedule III of the CGST Act.
• The Show Cause Notices and the Order-in-Original demanding GST were held to be without jurisdiction by the High Court and were quashed.