BESS storage activity taxable as support services, with no GST exemption for electricity supply under the cited notifications.

A Battery Energy Storage System that stores electricity by converting it into chemical energy and re-delivers it on demand was held not to be generation, transmission or distribution of electrical energy. On that basis, standalone BESS did not qualify for GST exemption on supply of electricity. The same reasoning was applied to co-located BESS: co-location changed the physical arrangement, not the essential storage function, so exemption or nil rate treatment under the cited notifications was unavailable. The activity was instead classified as support services to electricity transmission and distribution, taxable at 18%, and GST registration in Tamil Nadu was required for the taxable supplies made there.

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Issues: (i) Whether development and operation of BESS on a standalone basis amounts to supply of electrical energy eligible for exemption from GST under Notification No. 02/2017-CT (Rate) dated 28-06-2017. (ii) Whether development and operation of co-located BESS amounts to supply of electricity eligible for exemption under Notification No. 02/2017-CT (Rate) dated 28-06-2017 or nil rate under Notification No. 12/2017-CT (Rate) dated 28-06-2017. (iii) Whether the applicant's activity is taxable at 18% under support services to electricity transmission and distribution and whether GST registration in Tamil Nadu is required.

Issue (i): Whether development and operation of BESS on a standalone basis amounts to supply of electrical energy eligible for exemption from GST under Notification No. 02/2017-CT (Rate) dated 28-06-2017.

Analysis: The activity was found to be storage of electricity by conversion into chemical energy and its later re-delivery on demand, not generation of electricity. The statutory scheme under the Electricity Act and the Electricity (Amendment) Rules treated energy storage as part of the power system, but the ruling held that a standalone BESS does not itself become a generating, transmitting, or distributing utility. The exemption for electrical energy therefore did not apply to the applicant's standalone BESS activity.

Conclusion: Against the applicant. Standalone BESS does not amount to exempt supply of electrical energy.

Issue (ii): Whether development and operation of co-located BESS amounts to supply of electricity eligible for exemption under Notification No. 02/2017-CT (Rate) dated 28-06-2017 or nil rate under Notification No. 12/2017-CT (Rate) dated 28-06-2017.

Analysis: Co-location was treated as a matter of ownership and physical arrangement, not of the essential function of the facility. The same storage-and-dispatch function was performed in both standalone and co-located models. Since the activity remained one of providing storage support rather than generation, transmission, or distribution of electricity, the exemption notifications available to those utilities were held inapplicable.

Conclusion: Against the applicant. Co-located BESS is not exempt under either notification.

Issue (iii): Whether the applicant's activity is taxable at 18% under support services to electricity transmission and distribution and whether GST registration in Tamil Nadu is required.

Analysis: The applicant was held to be providing a storage facility in aid of electricity transmission and distribution, with consideration charged by capacity-based tariff rather than by sale of electricity. The activity was classified under support services to electricity transmission and distribution and held liable to GST at 18%. As taxable supplies were being made in Tamil Nadu, registration was held necessary for discharge of tax liability.

Conclusion: Against the applicant. The activity is taxable at 18% and GST registration in Tamil Nadu is required.

Final Conclusion: The ruling holds that both standalone and co-located BESS activities are taxable support services, not exempt supplies of electricity, and the applicant must discharge GST accordingly.

Ratio Decidendi: A battery energy storage system that stores electricity and re-delivers it on demand is not itself a generating, transmitting, or distributing utility; therefore, exemption notifications meant for supply of electricity or transmission and distribution services do not apply, and the activity is taxable as support services to electricity transmission and distribution.

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