TaxTMI 
TaxTMI 
2024 (3) TMI 672
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.... circumstances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s Tamil Nadu Generation. & Distribution Corporation Limited, 144, Anna Salai, Chennai 600002 (hereinafter called as "the Applicant") are registered under the GST Acts with GSTIN: 33AADCT4784E1ZC. ....
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....d also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee". • Accordingly, Tamil Nadu Electricity Regulatory Commission (Grid interactive Solar PV Energy Generating Systems) (GISS) Regulations, 2021 have been notified • Regulation 4(i-a) Charges recoverable by tire licensee in the Tamil Nadu Electricity Supply Code 2004 (Notification No. TNERC/SC/7/1 Dated 21-07-2004 as amended- "(i-a) The Wheeling charges/Network charges shall be payable by the HT/LT consumer category in accordance with the rates as the Commission may fix time to time for different category of consumers (to recover the cost incurred by the Licensee for its distribution wire business). Provided that the wheeling charges/Network charges may be denominated in terms of RS/kWh or Rs/kVAh or Rs/kW/month or Rs/kVA/month for the purpose of recovery from the Distribution network user or any such denomination as my be stipulated by the Commission." • The Explanatory statement under the amendment notification dated 28.05.2021 states- 3. Therefore it is proposed tha....
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....rovide for all or any of the following matters, namely: (p) reduction of surcharge and cross-subsidies under the third proviso to sub-section (2) of section 42; (q) payment of additional charges on charges of wheeling under sub-section (4) of section 42; (r) guidelines under sub-section (5) of section 42; (u) methods and principles by which charges for electricity shall be fixed under sub-section (2) of section 45;". Section 181 enables the Commission to make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. • From the above, it is expressly clear in so many words that network / wheeling charges, surcharge, and additional surcharge are charges for distribution of electricity. • The Applicant, however, out of abundant caution, is charging GST on few miscellaneous charges relating to HT consumers like cross subsidy surcharge, wheeling charges, etc. In respect of LT services, GST is levied on few miscellaneous charges from August 2021. • On the above analysis of the provisions and the nature and character of the network / wheeling charges, cross subsi....
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.... of the TN Electricity Supply Code, 2004, in Regulation 4(2), the charges for testing of equipments/installation is recoverable by the Licensee from the consumer. (4) Harmonic compensation charges Clause 4(1)(iv) in the Code states as follows: Where any equipment installed by a consumer generates harmonics, the consumer shall provide adequate harmonic suppression units to avoid dumping of harmonics into Licensee's distribution system and the Licensee is at liberty to provide suitable metering equipment to measure the harmonic level pursuant to such harmonic. Where the consumer fails to provide such units, he shall be liable to pay compensation at such rates as the Commission may declare from time to time. (5) Capacitor Compensation charge In the case of existing LT service connections (which are not coming under the purview of power factor incentive/disincentive scheme)] with connected load of motors of 3 HP and above or for using welding transformers (irrespective of their rating), the consumer shall install adequate capacitors within a period of two months from the date of issue of notice issued by the licensee in this connection a....
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....and actuals shall be collected or refunded accordingly. (10) Name transfer charge Every application for transfer of name, consequent to the death of the consumer or in other cases such as sale including auction sale/registered lease of property or any other lawful occupation etc., should be with a fee, as specified by the Commission. (11) Reconnection charge The Licensee shall collect reconnection charge from LT/HT consumers at the rates specified by the Commission from time to time. (12) Consumer Meter card replacement charge The Licensee shall collect charges at the rate specified by the Commission for replacement of consumer meter card if lost or damaged only not if the card is used up and replacement is necessary. (13) Dishonoured cheque service charge The Licensee shall collect service charges as specified by the Commission from time from the consumer, when a cheque given by consumer is returned by the Bank for any reason whatsoever. (14) Charges for restoration of cheque payment facility The Licensee shall collect service charges as specified by the Commission from time from the consumer....
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....he consumer under tire scope of excess demand chargeable category. For the remaining LT services [other than domestic / agricultural services or LT services with contracted demand equal to or less than 18.6 KW (25 HP)], when the contracted demand is in excess of 18.6KW (25HP) and for such of those consumers whose contracted demand is less than 18.6 KW (25HP) but opted for having meters with demand recording facility, the excess demand charges shall be as detailed in paragraph 5(2) of the Code. (18) Charges for providing CMRI data This is a Meter related charged and as provided under Regulation 5(11) of the Supply Code, the Licensee is authorized to collect charges for its Meter related works carried out for the consumers. (19) Recoveries from consumers for damage to board properties Section 136 of the Electricity Act, which deals with theft of electric lines and materials states that if an electric line, material or meter is cut or removed or taken away by whomsoever or if they store, or possess or carry away without the consent of the licensee/owner, shall be punishable with imprisonment and/or with a fine. Further amendment to....
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....g certified copies of documents to consumer These charges are collected for furnishing certified copies to the consumers, as per Regulation 17(9)(c) of the TN Electricity Supply code. (27) Additional surcharge An open access customer, receiving supply of electricity from a person other than the distribution licensee of Iris area of supply, shall pay to the distribution licensee an additional surcharge on the charges of wheeling, in addition to wheeling charges and cross-subsidy surcharge, to meet out the fixed cost of such distribution licensee arising out of his obligation to supply as provided under sub-section (4) of Section 42 of the Act. (28) Tariff change No charge is collected at present. (29) Dismantling charges The estimated cost for shifting a new service connection will cover 10% of the present value of the dismantled and reusable materials towards charges for dismantling and charges for loading, unloading, transport to new site/store. • In addition to the advance ruling sought regarding GST on network / wheeling charges, cross subsidy surcharge, and additional surcharges which are charges for di....
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....rges are also charges collected for distribution of electricity as each charges are detailed above • According to SI. No. 25 in the notification 12-CTR dated 28 June 2017 read with paragraph 2(z) of the definitions thereunder, transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST. Electricity transmission or distribution utility means, distribution or transmission licensee under the Electricity Act, 2003 or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government (read with corresponding notifications under SGST/IGST/UTGST Acts). • Similarly, with regard to the various other charges (detailed above) prescribed under the Electricity Act, and the regulations made thereunder, Estimate charges for Additional load/reduction in load, Excess contracted load charges, Excess demand charge and excess energy charge during restriction and control of supply, Excess demand and Excess energy charges are for the electricity supply which are exempt both under Sl. No. 25 in the notification 12-CTR dated 28 June 2017 as also SI, No. 104 in the notificat....
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....n charge 6 Service / line, structure arid equipments shifting charge 7 Name Transfer charge 8 Reconnection Charge 9 Consumer Meter Card Replacement Charge 10 Labour charges for shifting of meters or shifting of service lines 11 Charges for providing CMRI data 12 Recoveries from consumers for damage to board properties 13 Changing Meter at the request of the consumer 14 Inspection charges 15 Levy of charges for reduction in demand. 16 Changing/shifting of meter board/LTCT box/HT box due to damage or for accommodating additional safety features. 17 Replacement of damaged/burnt meter 18 Temporary disconnection at the request of the consumer. 19 Charges for furnishing Certified Copies of documents to Consumer are all ancillary to the principal supply of electricity. But for the fact of the applicant distributing electricity, the very need for charging the above would not arise. These are ancillary supplies naturally bundled and supplied in conjunction with the principal supply of electricity supply as per tire Code notified by the Commission under the E....
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....aining to value added services under 'electricity consumption' as additional/facilitation and to implement regulatory mechanism to charge the electricity from the consumers. • This cannot be treated as service under transmission and distribution of electricity and hence the said fist of services are liable to be taxed under TNGST Act, 2017. 3.2 The Centre jurisdiction Officer has not submitted any remarks and hence it is construed that there no proceedings pending/decided on the issue related to the question raised by the applicant. 4.1 The Applicant, after consent, was given an opportunity to be heard in person on 10,08.2023. Shri V Ravindran, Advocate, who is the Authorized Representative of the Applicant appeared for the hearing and he reiterated the submissions made in their application. The AR also submitted additional submissions during the personal hearing, wherein it was stated that,- • They perform various activities with charges payable by the consumers as statutorily fixed; Section 45(3) of the Electricity Act, 2003, states that the charges for electricity supply may include a fixed charge and rent or other charges in respect of an....
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.... 5.2 In terms of Section 97(2) of the CGST/TNGST Act, questions on which advance ruling is sought under the Act, falls within the scope of Section 97(2) (b) & (e) of the CGST/TNGST Act, 2017, and therefore the application is admissible. 5.3. The Applicant has sought Advance Ruling with the question that whether the various charges collected by them (29 charges list in para 2.2 above) along with network/wheeling charges, cross subsidy surcharge and additional charges are leviable to GST and further stated that these are charges for distribution of electricity and collected in connection with supply of electricity. 5.4. As per Section 2(102) of the CGST Act, 2017, 'Services' means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form., currency or denomination for which a separate consideration is charged.' Based on the above definition, we find that supply of electricity is a service, which falls under SAC 9969. Further, Notification No. 12/2017-CT(Rate) dated 28.06.2017, states that - Sl.no. Cha....
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....e to time towards its Distribution wire business." From the above, we find that the service provided by the Applicant to the users as 'wheeling/network charges' are only for providing the service of transmission of electricity and hence charges collected form the part of consideration for the same single service. Further it is seen that the charges are on the basis of the energy input to the system. Hence the wheeling/network charges collected is for the service of transmission of electricity and hence covered under the exemption stated in the notification cited supra. 5.5.2. Further, we find that the Applicant has cited Board's Circular No. 178/10/2022-GST dated 03.08.2022, wherein clarification regarding taxability in the case of has been issued in respect of dishonoured cheque charges and belated payment charges. In para 7.3 of the said Circular, it is stated that - '7.3 The fine or penalty that the supplier or a banker imposes, for dishonour of a cheque, is a penalty imposed not for tolerating the act or situation but a fine, or penalty imposed for not tolerating, penalizing and thereby deterring and discouraging such an act or situation. Therefor....
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....n 4. (1) Whether the activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are exempt from GST? (1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017-CT (R), SI. No. 25. The other services such as, - i. Application fee for releasing connection of electricity; ii. Rental Charges against metering equipment; iii. Testing fee for meters/ transformers, capacitors etc.; iv. Labour charges from customers for shifting of meters or shifting of service lines; v. charges for duplicate bill; provided by DISCOMS to consumer are taxable. From the above circular, we find that said 5 services, which are other than the service by way of transmission or distribution of electricity by an electricity transmission or distribution utility are taxable. We End that the intention of the circular is to keep away those services which are only ancillary in nature and not closely or directly related to transmission or distribution of electricity from being exempt from GST. In this regard, we f....
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....8 of CGST Act, 2017, which states that - 8. Tax liability on composite and mixed supplies.- The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Under Section 2(30) of the CGST Act, 2017, 'composite supply' has been defined as- (30) composite supply} means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration.- Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; From the above definition, we find that for a sup....