Levy of GST on electricity regulatory commission fees ruled not leviable; show cause notice set aside.

Levy of GST on fees charged by electricity regulatory commissions was examined and the services performed under the Electricity Act in discharge of regulatory and quasi-judicial obligations were held not to constitute supply in the course or furtherance of business; interpretation of "business" and "consideration" under the CGST Act and the Schedule III exclusion for services rendered by a court or tribunal formed the legal basis, and consequently the impugned show cause notice demanding tax on such fees was set aside.

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Issues: Whether fees received by a State Electricity Regulatory Commission (petition fee, ARR processing fee and license fee) for discharge of functions under Section 86 of the Electricity Act, 2003 attract levy of GST.

Analysis: The decision examines the applicability of the CGST Act definitions and exclusions to the fees received by a statutory commission. Relevant provisions considered include the statutory definition of "business" (Section 2(17)), "consideration" (Section 2(31)), the concept of "supply" in Section 7, the expansive definition of "services" (Section 2(102)), and the express exclusion in Schedule III for services rendered by a court or tribunal. The Analysis applies these provisions to the nature of functions exercised by a commission under the Electricity Act, 2003 (including duties under Section 86), assessing whether regulatory and quasi-judicial functions amount to activities in furtherance of business or constitute consideration for supply of goods or services. The Analysis also relies on a directly on-point decision of the Delhi High Court (dated 15.01.2025) holding that regulation of tariff, inter-State transmission regulation and issuance of licences are statutory regulatory/quasi-judicial functions and not taxable supplies, and notes that the Supreme Court dismissed the department's challenge, rendering that decision final.

Conclusion: GST does not apply to the fees in question; the show cause notice levying GST on petition fee, ARR processing fee and license fee is set aside and the writ petition is allowed in favour of the petitioner commission.

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