Statutory regulatory functions by an electricity commission are not taxable supplies for service tax or GST purposes.

A statutory electricity regulatory commission's tariff, licensing and allied regulatory functions were treated as non-commercial statutory duties, not trade, commerce or business, so they did not amount to a taxable supply under the CGST framework. The analysis rejected the premise that fees collected by the commission constituted consideration for GST or service tax, and applied the Schedule III exclusion for services by courts and tribunals. It was further noted that no artificial separation between regulatory and adjudicatory functions could be sustained for tax purposes. On that basis, the notices and orders levying service tax or GST were unsustainable and without jurisdiction.

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Issues: Whether the functions discharged by a statutory electricity regulatory commission in determining tariff, licensing and allied regulatory matters are exigible to service tax or GST.

Analysis: The impugned notices and orders proceeded on the premise that the fees collected by the regulatory commission constituted consideration for a taxable supply. The governing provisions of the CGST Act were examined to ascertain whether the commission's activities amount to business or to supply in the course or furtherance of business. The commission was treated as a statutory body performing adjudicatory and regulatory functions, and its functions were held to be neither trade nor commerce nor business. The exclusion in Schedule III relating to services by courts and tribunals was applied, and it was held that no artificial division between regulatory and adjudicatory functions could be sustained for tax purposes. On that basis, the levy was found to be without jurisdiction.

Conclusion: The regulatory commission's statutory functions are not exigible to service tax or GST, and the notices and orders levying such tax were unsustainable.

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