AAR declines ruling on GST exemption for electricity transmission services under Entry 25 of Notification 12/2017 due to inadmissible application scope

The AAR, Uttar Pradesh declined to rule on GST exemption for electricity transmission services under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate). The authority held that advance rulings can only be sought regarding supplies undertaken by the applicant, not supplies received from others. Since UPPTCL was the supplier and applicant was merely the recipient, the primary question was inadmissible. Consequently, related questions regarding Input Tax Credit eligibility and TDS liability were also not answered as they were dependent on the inadmissible primary question.

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Issues Involved:
1. Whether the services supplied by UPPTCL to the Applicant are exempt from payment of GST under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017Rs.
2. Whether the Applicant is eligible to claim Input Tax Credit (ITC) of the tax paid on services received from UPPTCLRs.
3. Whether the Applicant is liable to deduct Tax at Source (TDS) on the amount paid to UPPTCL for services supplied by itRs.

Detailed Analysis:

Issue 1: Exemption from GST for Services Supplied by UPPTCL
The applicant sought an advance ruling on whether the services supplied by UPPTCL are exempt from GST under Entry No. 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The applicant argued that the services provided by UPPTCL are in the nature of transmission of electricity and should be exempt from GST. They cited various legal provisions and case laws to support their claim that the services are integral to the transmission of electricity and thus exempt.

However, the Authority for Advance Ruling (AAR) noted that the supply in question is undertaken by UPPTCL, not the applicant. According to Section 95(a) of the CGST Act, an advance ruling can only be sought by an applicant in relation to the supply of goods or services undertaken or proposed to be undertaken by them. Since the applicant is only the recipient of the supply, the question was not admitted for consideration on merits.

Issue 2: Eligibility to Claim Input Tax Credit (ITC)
The second question was whether the applicant is eligible to claim ITC on the tax paid for services received from UPPTCL. The AAR observed that this question was prefixed with "subject to above," indicating it was contingent on the first question. Since the first question was not admitted, the second question was also not answered. The AAR clarified that the issue of ITC arises only if the services supplied are taxable. As the first question was not admitted, the second question was outside the purview of the authority.

Issue 3: Liability to Deduct Tax at Source (TDS)
The third question concerned whether the applicant is liable to deduct TDS on the amount paid to UPPTCL for the services supplied. This question was also prefixed with "subject to above," making it contingent on the first question. The AAR noted that the question of TDS deduction arises only if the services supplied are taxable. Since the first question was not admitted, the third question was also not answered as it was beyond the authority's jurisdiction.

Conclusion:
The AAR did not admit the application for the first question under Section 98(2) read with Section 95(a) of the CGST Act, 2017, as the applicant had raised questions as a recipient of service. Consequently, the second and third questions were not answered because they were contingent on the first question. The ruling is valid only within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.

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