Deposit works for transmission system changes treated as taxable supply, with recipient-incurred infrastructure cost included in value.

Facilitating deposit works for modification, augmentation, shifting or addition to a transmission system at the request of a consumer or intending agency was treated as a taxable supply of services because it involved services rendered for consideration in the course or furtherance of business. The value of supply was held to include amounts directly incurred by the consumer or intending agency for the infrastructure, since that expenditure formed part of the consideration where the work was done under the supplier's supervision or by the supplier itself. The arrangement was classified under the relevant service entry and GST was applied at 18%.

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Issues: (i) Whether facilitating the execution of deposit works for modification, augmentation, shifting or addition to the transmission system at the request of the consumer or intending agency is a supply under section 7; (ii) whether the value of supply includes the cost incurred directly by the consumer or intending agency when the work is executed under the applicant's supervision or by the applicant itself; (iii) the applicable rate of GST on such supply.

Issue (i): Whether facilitating the execution of deposit works for modification, augmentation, shifting or addition to the transmission system at the request of the consumer or intending agency is a supply under section 7.

Analysis: The activity was treated as a facilitation of access to the applicant's transmission system in the course or furtherance of business. The authority held that the transaction involved services rendered by one person to another for consideration, and that the arrangement fell within the scope of supply. It also relied on the rule in Schedule II that agreeing to do an act constitutes a supply of service.

Conclusion: Yes. The activity is a supply of services within section 7.

Issue (ii): Whether the value of supply includes the cost incurred directly by the consumer or intending agency when the work is executed under the applicant's supervision or by the applicant itself.

Analysis: The authority held that the applicant remained the owner of the infrastructure created or modified under the deposit works arrangement. Where the consumer or intending agency incurred the expenditure directly under supervision, that expenditure was treated as consumer contribution and formed part of the consideration. Applying section 15(2)(b), the amount incurred by the recipient for the infrastructure was required to be included in the value of supply. Where the applicant itself executed the work, the total cost estimate including overheads and other charges formed the transaction value.

Conclusion: Yes. The value of supply includes the direct cost incurred for the infrastructure, together with supervision and shutdown charges where applicable.

Issue (iii): The applicable rate of GST on such supply.

Analysis: Having found the activity to be a taxable supply of services, the authority classified it under the relevant service heading and applied the rate prescribed for the applicable entry in the GST rate notification.

Conclusion: GST is chargeable at 18%.

Final Conclusion: The deposit work arrangement was held to be a taxable supply of services, the full transaction value was held includible for GST purposes, and GST was held payable at the prescribed service rate.

Ratio Decidendi: A transaction is a taxable supply where a service is rendered for consideration in the course or furtherance of business, and where the recipient incurs part of the cost of creating the infrastructure that remains the supplier's property, that cost forms part of the value of supply under section 15(2)(b).

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