gst on electricity produced and supplied by sugar mills to electricity grid

[NEERAJ BANSAL]

Whether electricity produced by sugar mill by using by-product of sugar production (bagasse) and further supplying such electricity to electricity grid, comes under preview of GST or not.

[Shilpi Jain]

Sale of electricity is exempt. Though, is it a sale of electricity to grid or that comes as a reduction in your electricity charges?

[Shilpi Jain]

Another important aspect that you may require to analyse is whether there is any reversal of credit required for the inputs/capital goods etc. since these are all used to make taxable and exempt supplies.

Under earlier regime, i.e. excise it is clear that no reversal is required though in GST may be disputed.

[KASTURI SETHI]

Exemption to supply i.e.  transmission or distribution) of electricity (or energy) is conditional. Read serial no.13 of Notification No.11/17-CT(R) dated 28.06.17 as amended and serial no.25 of Notification No.12/17-CT(R) dated 28.6.17 as amended along with the definition of “electricity transmission or distribution utility" given in Paragraph No.2(z) of the notification itself.

AI Summary

GST treatment of electricity from bagasse: exemption possible, but input tax credit reversal and distribution conditions require analysis. Whether electricity generated from bagasse and supplied to the grid is taxable under GST depends first on whether that supply is characterised as a sale of electricity (with exemptions applying) or as a non sale adjustment; second, on whether the mill must effect input tax credit reversal because inputs/capital goods are used for exempt or mixed supplies; and third, on whether conditional exemptions for transmission or distribution apply by satisfying the definition of an electricity transmission or distribution utility under the notifications.