GST Ruling: Applicability on Materials, Capital Assets, Employee Deployment; Exemption Not Applicable

The authority ruled that GST is applicable on the supply of operation and maintenance materials and transfer of capital assets to TANTRANSCO. Additionally, GST applies to the deployment of employees as a supply of service, while transactions of physical fund flow and receipt of TANTRANSCO's income in TANGEDCO's bank account are not subject to GST. The exemption under Notification No. 12/2017-C.T. (Rate) does not apply to the transactions between the parties. Deposit Contribution Works are subject to GST, and TANGEDCO qualifies as a 'Government Entity' under relevant GST notifications. The question regarding the applicability of GST on transmission charges by GAIL was not addressed.

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Issues Involved:
1. GST applicability on the transactions between TANGEDCO Ltd. & TANTRANSCO Ltd.
2. Applicability of GST on Deposit Contribution Works (DCW).
3. Whether TANGEDCO Ltd can be considered a “Government Entity”.
4. Applicability of GST on Transmission Charges for Natural Gas.

Issue-wise Detailed Analysis:

1. GST Applicability on the Transactions Between TANGEDCO Ltd. & TANTRANSCO Ltd:
The transactions between TANGEDCO and TANTRANSCO include the supply of operation and maintenance materials, construction of sub-station buildings, erection of transformers, transfer of capital assets, transactions of physical fund flow, movement of employees, and receipt of TANTRANSCO’s income in TANGEDCO Bank A/c. The authority ruled that:
- Supply of operation and maintenance materials and transfer of capital assets are considered as 'supply of goods' and are subject to GST.
- Transactions of physical fund flow and receipt of TANTRANSCO’s income in TANGEDCO Bank A/c are transactions in money and thus not subject to GST.
- Movement of employees from TANGEDCO to TANTRANSCO is a 'supply of service' and is subject to GST.
- The exemption under Sl.No. 25 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 is not applicable to these transactions as they do not involve the mere distribution of electricity.

2. Applicability of GST on Deposit Contribution Works (DCW):
The DCW involves the shifting of service lines, structures, and equipment at the request of consumers. The authority classified these works under SAC 99873 (installation services other than construction) and ruled that GST is applicable as per Sl.No. 25 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. The applicant's reliance on the Gujarat High Court's decision in the case of Torrent Power Ltd. Vs UOI was noted, but the ruling was based on the current applicable notifications and circulars.

3. Whether TANGEDCO Ltd can be Considered a “Government Entity”:
TANGEDCO Ltd is a public company established by the Government of Tamil Nadu with more than 90% control and equity participation. The authority confirmed that TANGEDCO qualifies as a 'Government Entity' as defined under Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 and Notification No. 32/2017-C.T. (Rate) dated 13.10.2017.

4. Applicability of GST on Transmission Charges for Natural Gas:
The applicant is the recipient of natural gas from GAIL, which charges GST on transmission charges along with VAT on the sale of natural gas. The authority ruled that since the applicant is the recipient and not the supplier of the service, the question does not fall within the purview of an advance ruling as per Section 95(a) of the CGST Act. Hence, this question was not admitted and not answered on its merits.

Ruling Summary:
1. GST is applicable on the supply of operation and maintenance materials and transfer of capital assets to TANTRANSCO.
2. GST is applicable on the deployment of employees to TANTRANSCO as it is a supply of service.
3. GST is not applicable on transactions of physical fund flow and receipt of TANTRANSCO’s income in TANGEDCO’s bank account as these are transactions in money.
4. The exemption under Sl.No. 25 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 is not applicable to the stated transactions between TANGEDCO and TANTRANSCO.
5. Depository Contribution Works (DCW) is classifiable under SAC 99873 and is subject to GST.
6. TANGEDCO is a 'Government Entity' for the purposes of the relevant GST notifications.
7. The applicability of GST on transmission charges billed by GAIL was not answered as it was not admitted under the advance ruling provisions.

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