TaxTMI 
TaxTMI 
2024 (7) TMI 359
X X X X Extracts X X X X
X X X X Extracts X X X X
....input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only,- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant 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 appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 15. Excess demand charge and excess energy charge during restriction and control of supply 16. Labour charges for shifting of meters or shifting of service lines 17. Excess demand and excess energy charges 18. Charges for providing CMRI data 19. Recoveries from consumers for damage to board properties 20. Changing meter at the request of the consumer 21. Inspection charges 22. Levy of charges for reduction in demand 23. Changing/shifting of meter board/LTCT box/HT box due to damage or for accommodating additional safety features 24. Replacement of damaged/burnt meter 25. Temporary disconnection at the request of the consumer 26. Charges for furnishing certified copies of documents to consumer 27. Additional surcharge 28. Tariff change 29. Dismantling charges The Authority for Advance Ruling (AAR) vide Ruling No. 122/AAR/2023 dated 19.12.2023 ruled that the charges collected by the Appellant for the activities, viz., Belated Payment Surcharge, Dishonoured cheque service charge, and Network/Wheeling charges are exempted from GST as per entry No. 25....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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. The findings of the AAR in para 5.6.1 of the impugned ruling is that the ten charges referred therein are ancillary to transmission and distribution of electricity. The very meaning of "ancillary", is "providing necessary support to the main work or activities of an organization." Therefore, the AAR erred in not holding these services to be naturally bundled in the ordinary course of business with the principal supply of electricity by a transmission and distribution utility. Moreover, it is a further noted position from the Electricity Supply Code in paragraph 2.2 in the impugned order that all these charges referred to in the proceedings are those prescribed statutorily under the Electricity Act, 2003 by way of notifications issued. iii) Similarly, the seventeen charges enumerated in paragraph 5.6.3 of the impugned order are also found by the AAR to be ancillary to the principal supply. Here again, the AAR erred ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....added that the judgement in the case of M/s. Torrent Power Ltd., treats the services related to transmission and distribution of electricity as a 'Composite supply', thereby getting covered under the exempted category, as the principal supply of transmission and distribution of electricity stands exempted. 4.4 They stated further that Notifications issued during the pre-Negative List era, viz., 11/2010-ST dated 27.02.2010, 32/2010 dated 22.06.2010, 45/2010-ST dated 20.07.2010, etc., do have relevance in the present scenario as well, as the clauses relating to exemption have remained the same throughout. They furnished an additional written submission during the personal hearing and they undertook to furnish any other information/document in this regard, as and when called for. 4.5 Under the additional submissions filed during the personal hearing held on 14.05.2024, the following points were highlighted, apart from reiterating the points discussed already during the personal hearing, i.e., - i) It is an admitted fact that the decisions of the Hon'ble High Courts in the cases of M/s. Torrent Power Ltd., M/s. Jodhpur Vidyut Vitran Nigam Ltd., and M/s. BSES ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted above. 4.6 It was noticed that the Hon'ble Gujarat High Court of Gujarat at Ahmedabad, in the case of Torrent Power Ltd. Vs UOI [R/Special Civil Application No. 5343 of 2018], vide its Order dated 19.12.2018 has ruled that the exclusion clause of the para 4 (1) of the impugned circular No. 34/8/2018-GST dated 01.03.2018 is struck down as being ultra vires to Section 8 of the CGST Act, 2017 as well as Notification No. 12/2017-CT(Rate) dated 28.06.2017[sl.no.]. This being the crux of the issue in the instant case, it is ascertained that the Hon'ble HC's order has not been accepted by the Department, and a SLP(C) Diary (Civil) No. 019431/2019 (Diary No. 24733 of 2019) has been filed before the Hon'ble Supreme Court. The Supreme Court after condoning the delay has granted leave in the said case, whereby the matter becomes sub-judice. 4.7 As the aforesaid legal position did not form part of the discussions during the personal hearing held on 14.05.2024, it was imperative on the part of Department to inform the appellant of the said legal position and seek their comments/view before proceeding further in this case. Therefore, the appellant was accorded another o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unter this finding the appellant herein, in the written submissions taken on record in the earlier hearing on 14.05.2024 itself, it was highlighted, among various submissions, the fact of the binding nature of the High Court judgments and in this context, two decisions were also cited. 3. It is respectfully submitted that the GST is an all India legislation, and the law laid down by the Hon'ble High Court in Torrent Power is squarely covering the appellant's case in the present appeal, which fact is apparently agreed in the communication dated 24.05.2024 cited as the crux of the issue. It is further respectfully submitted that Article 261 of the Constitution mandates the application of the law laid down by the Hon'ble High Courts in any part of the country. 4. As regards the present appeal, it is submitted that the appellant is a 100% owned entity of the Government of Tamil Nadu. The appeal was filed and admitted after due process of law. The provisions of Section 101 of CGST/SGST Acts mandate disposal of the appeal by Hon'ble AAAR and this mandatory requirement is also within a time frame of ninety days from the date of fling of the appeal. Further th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmitted that the appellant is unable to persuade itself to accept the observations conveyed in the communication dated 24.05.2024, to the effect that "no decision could be made at this stage". The appellant had made all the submissions on the merits in support of its appeal seeking a favourable advance ruling from the AAAR and the Hon'ble AAAR recorded the same after their patient hearing, on 14.05.2024. 8. It is further highlighted that it is already over 5 years since the said SLP was filed by the department before the Hon'ble Court. The appellant apprehends that any delay in the disposal of the present appeal, particularly without expression sanction in law available in GST Acts, would cause irreparable loss and hardship to the appellant. The very purpose and the objectives of its decision to seek an advance ruling would defeat the objectives and the uncertainties would have a cascading effect on the Government owned utility. On the contrary, the Hon'ble AAAR's ruling in line with the Torrent Power case would pave way for the certainly of law and procedure under GST not only for the appellant, but would serve as a wholesome ruling having persuasive and p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Power Ltd. Vs UOI [Order dated 19.12.2018 in R/Special Civil Application No. 5343 of 2018], wherein the exclusion clause of the para 4 (1) of the said circular has been struck down as ultra vires to Section 8 of the CGST Act, 2017 as well as Notification No. 12/2017-CT (Rate) dated 28.06.2017 [sl. no. 25]. We notice that though the AAR has taken cognizance of the above; it has been stated in the impugned order that the said decision of the Hon'ble High Court cannot be cited as a precedent in the present case since the issue has not reached finality, in as much as the Hon'ble High Court order has not been accepted by the Commissionerate concerned and a SLP(C) No. 019431/2019 (Diary No. 24733/2019) has been filed before the Hon'ble Supreme Court. Accordingly, the AAR had gone on to hold that the following services are taxable based on the Board's Circular cited supra, i.e.,- i) Application fee ii) Meter Rent iii) Testing fee iv) Service/line structures and equipment shifting charge. and that the following services that are akin to the one included in the exclusion clause of para 4 of the impugned Circular are also accordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pted from the supply of 'services of distribution of electricity'. As per their submissions, in the course of providing service for distribution of electricity, they also provide other services for which they collect charges as detailed in para 3.1 above. 5.6 In this regard, the clarification issued by the CBIC, in relation to query 4 (1) of the Circular No. 34/8/2018-GST dated 01.03.2018, is reproduced as below Sl.No. Issue Clarification 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court, whereby the matter becomes sub-judice at this stage, whether with a stay or otherwise. We would like to highlight here that the issue involved in the instant case is being widely discussed/contested throughout the country, as confirmed by the appellant themselves through their submissions that two other judgements i.e., the Hon'ble Rajasthan High Court order dated 05.02.2021 in the case of M/s. Jodhpur Vidyut Vitran Nigam Ltd., and the Hon'ble Delhi High Court order dated 13.12.2023 in the case of M/s. BSES Rajdhani Power Ltd., have been issued concurring with the decision as in M/s. Torrent Power Ltd., case; and therefore we feel that many other decisions on this very same issue may be pending at various levels. Therefore, once a special leave is granted in a case which is widely discussed, and the appeal is admitted by the Hon'ble Supreme Court, the matter becomes sub-judice. On this aspect, we derive strength from the Hon'ble Supreme Court judgement dated 5.02.2004 in the case involving Union of India Vs. West Coast Paper Mills Ltd., reported in 2004 (164) E.L.T. 375 (S.C), where under paras 14 and 15, it has been stated as follows,- "14. Article....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all taxable services relating to transmission (upto 26.02.2010) and distribution (upto 21.06.2010) of electricity, shall not be required to be paid, during the aforesaid period. Section 66D of the Finance Act, 1994 (Negative List) - The negative list shall comprise of the following services, namely :- "k) transmission or distribution of electricity by an electricity transmission or distribution utility." Notification No. 12/2017-CT(Rate) dated 28.06.2017 - Sl. No. 25 - Supply of services of "Transmission or distribution of electricity by an electricity transmission or distribution utility." 5.11 From the above, it could be seen that at present, the exemption under Sl. No. 25 is available to supply of 'services of transmission or distribution of electricity", and under the 'Negative List era', the exemption as provided under clause (k) of Negative List was also available to 'service of transmission or distribution of electricity'. Even during the 'pre-Negative List era' exemption was available to 'services for transmission of electricity' separately under Notification No. 11/2010-ST dated 27.02.2010, and to 'servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ST dated 27.02.2010, and No. 32/2010-ST dated 22.06.2010. 5.12 Accordingly, we note that the various legal provisions relating to exemption from payment of taxes on services involving transmission or distribution of electricity during the 'pre-Negative List era', Negative List era', and the 'GST era' at present, are only for the services of transmission of distribution of electricity', and not in respect of the services 'related to' it. Even the Notification No. 45/2010-ST dated 20.07.2010, exempting services relating to transmission or distribution of electricity, covering only a specified period upto the year 2010 during the 'pre-Negative List era', appears to have been issued by the Government as a 'one-time measure' probably only intended to avoid retrospective effect of legislation or to avoid litigation for the period prior to 2010. Other than this, the absence of the term 'services relating to' preceding 'transmission or distribution of electricity' in any other exemption Notification/Negative list, is to be seen as a conscious effort on the part of the Government to not include the services related to transm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt in the name of the applicant on the issue in hand. In this context, we find that the term 'applicant' is defined under Section 95(c) of the Act, which "means any person registered or desirous of obtaining registration under this Act", which goes to prove that the definition of 'applicant' is not restricted to provisions related to Advance Ruling alone, and that the definition is meant to cater to the entire Act. Further, we notice that English has two articles, 'the' which is called definite article and 'a/an' which is indefinite article. While the article 'the' is used to refer to specific or particular nouns, 'a/an' on the other hand is used to modify non-specific or non-particular nouns. The use of the article 'an' before the noun 'applicant' is meant to denote a non-specific noun, and in other words, the term "an applicant" has to mean any applicant and not a particular applicant. Thus, in the light of said definition, we do not find force in the applicant's argument inasmuch as the term "applicant" means any person registered under this Act and it could be best interpreted that the legislative intent in it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....turally bundled with the principal supply, i.e., transmission/ distribution of electricity, as the main supply may take place without the said ancillary charges. Notwithstanding the same, we notice from the 'Grounds of Appeal' filed by the Department, that the appeal is on both counts, i.e., services in relation, to transmission and distribution of electricity, which are not covered under Sl. No. 25 of the exemption Notification No. 12/2017, dated 28.06.2017, and also in respect of the services that cannot be termed as 'composite' in nature to the principal supply of transmission and distribution of electricity as laid down in Section 8 (a) of the CGST Act, 2017. For the sake of clarity, the operative portion of the judgment dated 19.12.2018 of the Hon'ble High Court is reproduced as below:- "Paragraph 4 (1) of the impugned circular No. 34/8/2018-GST dated 1.3.2018 to the extent the same reads as under is hereby struck, down as being ultra vires the provisions of Section 8 of the Central Goods and Services Tax Act, 2017 as well as Notification No. 12/2017-CT (R) serial No. 25." 5.18 Further, the appellant has contended in their written submissions fi....