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

Debate on GST applicability for electricity from bagasse by sugar mills; input credit reversal and exemptions questioned. A discussion on a forum addressed whether electricity produced by sugar mills using bagasse and supplied to the electricity grid is subject to GST. One participant noted that the sale of electricity is typically exempt, but questioned whether the transaction is a sale or a reduction in electricity charges. Another highlighted the need to consider whether input credit reversal is necessary, as it is clear under the excise regime but potentially disputable under GST. A third participant pointed out that exemptions for electricity supply are conditional, referencing specific notifications and definitions related to electricity transmission or distribution utilities.