Electricity transmission utility's tower shifting and height raising services for railways and highways attract 18% GST under heading 999792

Maharashtra AAR ruled that a state electricity transmission utility's services of shifting/height raising transmission towers/lines for dedicated consumers like railways and highway authorities constitute taxable supply under GST. The authority held these services fall under "agreeing to do an act for consideration" classified under heading 999792, attracting 18% GST. Time of supply follows Section 13 of CGST Act 2017, with value determined under Section 15. Similarly, construction of EHV substations/lines for dedicated consumers also constitutes supply. The services were deemed outside exempted transmission services as they serve infrastructure development rather than electricity consumers directly.

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ISSUES:

• Whether various works undertaken by the transmission utility for dedicated consumers constitute "supply" under GST law.
• If such works are "supply," determination of the time of supply.
• Classification of services under appropriate HSN/SAC codes and applicable GST rates.
• Admissibility and timing of Input Tax Credit (ITC) on running bills received from contractors.
• Valuation of supply at the time of receipt of consideration.
• GST implications and credit treatment in cases of excess deposit refund to consumers post completion of works.
• GST liability and time of supply on recovery of shortfall amounts from consumers after completion of works.
• Whether the transmission utility acts as a pure agent in recovering costs from consumers.
• Tax treatment of allotment of existing spare assets (e.g., feeder bays) to dedicated consumers for use over a specified period.

RULINGS / HOLDINGS:

• The works undertaken by the transmission utility for dedicated consumers, including shifting/height raising of transmission towers, construction of EHV substations and lines, and construction of new transmission bays, constitute "supply" under GST.
• Time of supply for all such works shall be determined as per Section 13 of the CGST Act, 2017, generally the earliest of invoice issuance or receipt of payment (including advance).
• Shifting/height raising services are classifiable under Heading 999792 (services of agreeing to do an act for a consideration) and taxable at 18% GST (9% CGST + 9% SGST).
• Construction and management services for EHV substations, lines, and transmission bays are not works contracts (due to no transfer of property in goods) but fall under Heading 998339 (project management/engineering services) and are taxable at 18% GST.
• Allotment of existing spare assets such as feeder bays to dedicated consumers for a specified duration constitutes renting of immovable property under Heading 997212, taxable at 18% GST.
• Input Tax Credit (ITC) on running bills from contractors depends on whether the construction relates to "plant and machinery" or "immovable property." ITC is not available for works relating to immovable property (other than plant and machinery) under Section 17(5)(d) of the CGST Act. Determination requires case-specific facts; hence no generic ruling on ITC admissibility or timing was given.
• Value of supply at the time of receipt of consideration shall be determined under Section 15 of the CGST Act, 2017.
• Refund of excess deposit to consumers post-completion of works requires issuance of credit notes under Section 34; credit cannot be claimed without compliance.
• Recovery of shortfall amounts from consumers post-completion requires issuance of debit notes or supplementary invoices under Section 34, and GST liability arises at the time of receipt of such consideration.
• The transmission utility does not qualify as a pure agent in these transactions under Rule 33 of the CGST Rules, 2017 because it retains title to goods/services, uses assets for its own interest, and bears responsibility for contract execution.

RATIONALE:

• The legal framework applied includes the Central Goods and Services Tax Act, 2017 (CGST Act), Maharashtra Goods and Services Tax Act, 2017 (MGST Act), relevant notifications (notably Notification No. 12/2017-Central Tax (Rate) and its amendment Notification No. 8/2024), and CGST Rules, 2017.
• Exemption notifications were interpreted narrowly: transmission of electricity and minor ancillary services (e.g., metering, testing) are exempt, but major infrastructural construction and shifting works are taxable supplies.
• The Court applied the principle of ejusdem generis to limit exemption to services "incidental or ancillary" to electricity transmission, excluding major construction activities which are core business functions.
• Section 7 of CGST Act defines "supply" broadly to include all forms of supply for consideration in the course of business, supporting classification of the applicant's activities as supply.
• Input Tax Credit provisions under Sections 16 and 17 were analyzed, with particular focus on Section 17(5)(d) restricting ITC for construction of immovable property except plant and machinery, and the definition of plant and machinery under Section 17 explanation.
• Rule 33 of CGST Rules was examined to assess "pure agent" status, with the utility failing to meet conditions such as non-retention of title and non-use of goods/services for own interest.
• Valuation and time of supply rules under Sections 12, 13, and 15 of the CGST Act were applied to determine timing and value of taxable events.
• Procedural compliance for issuance of credit and debit notes under Section 34 was emphasized for adjustments in GST liability on post-completion deposit variations.
• No dissent or doctrinal shift was noted; the ruling followed established GST principles and recent amendments to exemption notifications.

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