GST on transmission line shifting and substation works applies on transaction value, with input tax credit allowed on related inputs.

Shifting of transmission lines and construction or installation of substations or transmission lines for third parties on a contribution basis were treated as a separate taxable service under GST, not as exempt electricity transmission. The activity was classified under service heading 998631 and valued on the transaction value, comprising the total amount recovered for material, labour and supervision. It was not regarded as a works contract on the facts. Input tax credit on the related material and services was held admissible because they were used in the course or furtherance of business, and the fact that the asset remained owned by the applicant did not bar credit.

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Issues: (i) Whether shifting of transmission lines and construction or installation of sub-stations or transmission lines for third parties, undertaken on contribution basis, are taxable under GST, their classification, rate, and taxable value. (ii) Whether input tax credit is available on material and services used in such works where the asset remains owned by the applicant.

Issue (i): Whether shifting of transmission lines and construction or installation of sub-stations or transmission lines for third parties, undertaken on contribution basis, are taxable under GST, their classification, rate, and taxable value.

Analysis: The supply was found to be a separate service undertaken on specific request of the recipient and not a part of the exempt transmission of electricity. The work did not amount to a works contract because transfer of property in goods in execution of the contract was absent, though the asset remained with the applicant. The activity was treated as a mixed supply and classified under service head 998631. The applicable valuation was held to be the transaction value under section 15, covering the total cost recovered, including material, labour, and supervision charges.

Conclusion: The services are taxable at 18%, classified under service head 998631, and GST is payable on the transaction value comprising the total recovered amount.

Issue (ii): Whether input tax credit is available on material and services used in such works where the asset remains owned by the applicant.

Analysis: Input tax credit was held admissible because the goods and services were used in the course or furtherance of business. The blocked credit provisions were found inapplicable on the facts, and ownership of the asset remaining with the applicant did not bar credit where the taxable supply was executed for business purposes.

Conclusion: Input tax credit is admissible on the material and services used in the above works.

Final Conclusion: The ruling resolves the contribution works as taxable supplies under GST with value based on the full transaction value, while also recognising eligibility to input tax credit on the related inputs and input services.

Ratio Decidendi: A service undertaken on specific request for a separate consideration, though connected with electricity transmission, is not exempt merely because the underlying infrastructure remains with the supplier; where the work is not a works contract and is not naturally bundled with the principal exempt supply, GST applies on the transaction value and credit is allowable if used in the course of business.

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