TaxTMI 
TaxTMI 
2025 (6) TMI 579
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....laimed by MSETCL, then whether ITC can be claimed in the period in which the running bill is received or on the receipt of the final invoice/completion of entire work? d. What shall be the value of supply at a particular moment when consideration is received? 3. In case, the deposit obtained from the end users becomes excess on the final completion of the works and the excess amount is refunded back to the Dedicated Consumers, then whether credit can be claimed for the purposes of GST liability in respect of the said amount? This question is asked because the works get completed even after a lapse of 2-3 years. 4. In case, the deposit obtained from the Dedicated Consumers falls short on the final completion of the works and if such amount is recovered from the end user, then whether we shall be liable to pay GST on the same and if yes, then what shall be the time of supply in this case? This question is asked because the works get completed even after a lapse of 2-3 years. a. Transaction One: Shifting/Height raising of Transmission Towers/Lines, belonging to MSETCL through a contractor on the request of the Dedicated Consumers such as railways, National Highway Authority of I....
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....o cater the Transmission of Electricity between the generation and distribution companies in the state of Maharashtra, The EHV Substations & EHV Lines are constructed as per the State Transmission Utility (STU) Plan and approval of Maharashtra Electricity Regulatory Commission (MERC). Such assets are capitalized for the compounded value of the total cost incurred including and cost. The construction activities are carried out through the outside agency i.e. contractors appointed by MSETCL as per the rules and regulation of MSETCL the contractors are reimbursed with the total cost of construction (including GST). The MERC allows MSETCL Return on Equity (ROE) and Operation & Maintenance (O&M) charges on asset constructed as per the regulatory framework of MERC in the form of tariff for transmission services which is borne by electricity consumer (i.e., general public) of Maharashtra State: 1.4 Construction and maintenance of Extra High Voltage (EHV) network for customers/users as per their requirements: MISETCL executes such works/services for the customers/users as per their specific requirements. These works/services are executed in two models i.e. on out right Contracts (ORC) ba....
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....user thru a Demand Note. Charges, other than the supervision charges are paid by the end user to the contractor directly. Therefore, in this scenario, we are of the view that there is no supply of services by MSETCL (other than supervision) and hence no question of any GST liability on the same. The following are the works carried by the company on ORC basis as per the requirement of respective dedicated user. 1.7 In this business model, the contracts are of following types: 1.7.1 Sub-type One: Shifting/Height raising of Transmission Towers/Lines: i. Nature of contract: in this case, the concerned Dedicated Consumers for their project works like Construction/ Widening of Highways, laying of Railway Networks. etc .; approach the MSETCL for shifting of transmission towers/lines. As transmission tower lines that belongs to MSETCL, the ORC Consumer for their project work approach the MSETCL for shifting of Transmission Tower Lines that belongs to MSETCL. For example, NHAI approaches the MSETCL for shifting/ height raising of the existing Transmission Lines/towers or shifting of Transmission Lines/Towers towards widening/construction of roads. ii. Consideration from recipient of ....
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....n / electrical bay along with supervision charges to MSETCL. iii. Execution of contract: MSETCL further award the contract to the contractor for construction of new transmission / electrical bay by floating a tender. iv. Consideration paid to contractor: Contractor raises Running Account Bills, including GST as per stages of completion of work. v. Capitalization of property in assets: After the completion of work the Asset so created is adjusted against the remittance received from dedicated user/consumer. The Asset is capitalized in the MSETCL books at Re 1. 1.7.4 Sub-Type Four: Existing asset available with MSETCL (like express feeder, bay etc.) is allotted to the Dedicated Consumers for its dedicated use. i. Nature of contract: In this case, the existing Asset (like bay etc.) available as a spare with MSETCL, is allotted to the Dedicated Consumers for their demand for its dedicated use by respective consumer. For example, IT Hub approaches the MSETCL for allotment of spare bay /feeder towards dedicated/uninterrupted power supplies for their IT Set-up. ii. Consideration: The cost of asset already constructed is recovered from the consumer and deposit received from the ....
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....lving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects; As per separately given 995461 2. electrical wiring and fitting services for emergency power supply systems; As per separately given 995461 3. electrical services arising from the installation of appliances; As per separately given 995461 4. installation services of meters; installation services of fire alarm systems; As per separately given 995461 5. installation services of burglar alarm systems at the construction site; As per separately given 995461 6. installation services of all types of residential antenna including satellite antenna; As per separately given 995461 7. installation services of cable television lines within a building; installation services of lightning conductors; As per separately given 995461 8. electrical installation services of telecommunications equipment; As per separately given 995461 9. electrical installation services of illumination and signalling systems for roads, railways, airports, harbours and similar premises; As per separately give....
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....work for transmission of electricity-(Generation to Distribution as per MERC guidelines) 3. Construction and maintenance of Extra High Voltage (EHV) Network for transmission of electricity-(for Customer as per specific requirement.) Model-1 Outright Contracts- Consideration received from the dedicated consumer in ORC has two components i.e. Cost of the work (advance deposit on estimated basis) and the Supervision charges (15% of the estimated cost). Model-2 Supervisory basis Transaction Type 1: Shifting/Height Raising of transmission Tower/Lines belonging to MSETCL through a contractor on the request of the 'Dedicated Consumer' such as Railways, National Highway Authority of India, etc. on receipt of payment of consideration in the form of adjustable deposit. Transaction Type 2: Construction of EHV Substations and EHV Lines for dedicated user of Dedicated Consumers by MSETCL through a contractor on the request of Dedicated Consumers on receipt of payment of consideration in the form of adjustable deposit. Transaction Type 3: Construction of New Transmission Bay/Express Feeder for dedicated use of consumer by MSETCL through a contractor on the request of Dedicated Consumer....
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....ctrical installation services including Electrical wiring & fitting services, fire alarm As per separately given installation services, burglar alarm system installation services. 995461 1. special trade installation services involving the installation of basic electrical wiring circuits or fittings in buildings and other construction projects; As per separately given 995461 2. electrical wiring and fitting services for emergency power supply systems; As per separately given 995461 3. electrical services arising from the installation of appliances; As per separately given 995461 4. installation services of meters; installation services of fire alarm systems; As per separately given 995461 5. installation services of burglar alarm systems at the construction site; As per separately given 995461 6. installation services of all types of residential antenna including satellite antenna; As per separately given 995461 7. installation services of cable television lines within a building; installation services of lightning conductors; As per separately given 995461 8. electrical installation ser....
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....f land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply. Explanation. - For the above purpose, "total amount" means the sum total of,- (a) consideration charged for aforesaid service; and (b) amount charged for transfer of land or undivided share of land, as the case may be. 3. In case the deposit obtained from the end users becomes excess on the final on the final completion of the works and the excess amount is refunded back to the dedicated Consumes, then whether credit can be claimed for the purpose of GST liability in respect of the said amount? Above 3 and 4 are asked because the works get completed even after lapse of 2-3 yrs. Comment - Credit notes may be issued to the Recipient of service. 4. In case the deposit obtained from the Dedicated Consumers falls short on the Vinal completion of the works and if such amount is recovered from the end....
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....he applicant are as under:- a. Outright contracts:- Here the customer provides a contract to the applicant which is then handed over by the applicant to sub-contractors. The applicant charges the cost of the contract + 15% supervisory charges for the said contract. The cost of the contract is recovered as a deposit and the supervisory charges are booked to the profit and loss account. b) Supervisory Basis: Here, the contract is between the Consumer and the contractor and the role of the applicant is only that of a supervisor of the said work. The payment for the contract is made directly by the user to the contractor and the supervisory charges is recovered by the applicant by raising a demand note for the services provided. In the light of the above models, the applicant has submitted details of four types of transactions undertaken by them and has sought a ruling on the taxability of the said transactions, amongst other questions. Therefore, it is imperative that we look into these transactions separately. 4.3 Before we delve into the various transactions, it would not be out of place to mention the amendment to the Notification No. 12/2017 dated 28.6.2017 by Notification N....
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....justed against the remittance received from dedicated user/consumer, The Asset is capitalized in the MSETCL books at Re. 1. It is seen from the nature of the contract that in this case, the transmission towers and lines have already been laid out by the applicant and the customer approaches the applicant for shifting of the transmission tower lines or raising the height of the towers for widening / construction of roads etc. We find that the said services are neither services of transmission of electricity or any service incidental or ancillary to the said service. In fact, this service is not even provided to the actual consumers or users of the electricity. It is a service of shifting of transmission lines so that there is no hindrance for the various persons such as National Highway Authority, Railways etc., in widening of roads, giving right of way etc. For the said shifting of the transmission lines which come in the way of their work, these customers approach the applicant requesting them to shift the transmission towers or raise the height of the transmission lines or towers for which they offer compensation which includes the cost of the said work along with 15% Supervisor....
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....estions which arise in light of the aforesaid findings are as under :- a) What shall be the time of supply? Since no specific contract details are available, we find that in general, the time of supply shall be the time prescribed under Section 13 of the CGST Act, 2017. b) What shall be the HSN/SAC Code and rate of GST for such "supplies"? The service would be covered under the services of agreeing to do an act for a consideration and would be classifiable under Heading 999792 and chargeable to 18% GST (9% SGST + 9% CGST). c) Whether ITC on the running bills received from the contractor can be claimed by MSETCL? If ITC can be claimed by MSETCL, then whether ITC can be claimed in the period in which the running bill is received or on the receipt of the final invoice/completion of entire work? The issue of admissibility of input tax credit is covered under the provisions of Section 16 and 17 of the CGST Act, 2017. Subject to the fulfilment of all the conditions laid down under Section 16, the applicant would be entitled to avail the ITC if it is not restricted under Section 17 of the CGST Act, 2017. We find that the work of shifting of transmission line is handed over by ....
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....will be on the basis of the running bills raised by the sub-contractors. d. What shall be the value of supply at a particular moment when consideration is received? The value of supply shall be the value as determined under Section 15 of the CGST Act, 2017. 4.6 Transaction Type 2: Construction of EHV Substations and EHV Lines for dedicated user of Dedicated Consumers by MSETCL through a contractor on the request of Dedicated Consumers on receipt of payment of consideration in the form of adjustable deposit. We have gone through the submissions made by the applicant in this regard. The nature of the activity as propagated by the applicant is as under :- i. Nature of contract: in this case, concerned Dedicated Consumers for their uninterrupted dedicated supply of electricity approaches the MSETCL. for construction of new EHV Substations/lines. For example, Indian Railways approaches the MSETCL for construction of the new substation or/and the Transmission Lines for their upcoming new railways network. ii. Consideration; The respective ORC Consumer make remittance (Deposit) of cost of new substation and the Transmission Lines with supervision charges to MSETCL, iii. Execut....
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.... e) PLjCC & FOTE equipment, OPGW 9.6 Km or actual. f) 220V & 48V battery and battery charger. g) Suitable ABT metering arrangement capable of measuring Four Quadrant Reative Energy alongwith AMR facility with integration to control Center at SLDC. h) Establishment of SCADA for remote end control and monitoring alongwith real time data visibility at SLDC. Thus, from the aforesaid scope of work in establishing an EHV Sub Station, it is seen that these are major works of creating an asset for the purpose of transmission of electricity. Without construction of these sub stations, it would not be possible to transmit electricity to the dedicated consumer. The applicant is claiming that such works would be covered under S. No. 25A of the Notification 12/2017 dated 28.6.2017, which reads as under :- "Supply of services by way of providing metering equipment on rent, testing for meters/ transformers/capacitors etc., releasing electricity connection, shifting of meters/service lines, issuing duplicate bills etc., which are incidental or ancillary to the supply of transmission and distribution of electricity provided by electricity transmission and distribution utilities to their co....
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....able activity for the purpose of transmission of electricity without which the transmission of electricity safely and in the required quantity is not possible. Under the said circumstances, it is not possible to term such activity as incidental or ancillary activity but such activities will have to be termed as the core and main activity of the applicant. Therefore, we find that such an activity would not qualify as a activity incidental or ancillary to the activity of transmission of electricity by the applicant and therefore the said activity would not be covered under the said exemption notification. This is also not covered by entry 25 of the notification no. 12/2017 dated 28.08.2017 which only covers the services of transmission of electricity and not creation of infra for such transmission. The services provided by the applicant of setting up of infrastructure for transmission of electricity are more akin to managing the construction of infrastructure for provision of supply of electricity by providing skills of engineering, project management and supervision of the actual construction. Supply has been defined under the CGST Act under Section 7 as all forms of supply of goods....
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.... admissibility of input tax credit is covered under the provisions of Section 16 and 17 of the CGST Act, 2017. Subject to the fulfilment of all the conditions laid down under Section 16, the applicant would be entitled to avail the ITC if it is not restricted under Section 17 of the CGST Act, 2017. We find that the work of construction of EHV Sub Station/ EHV Lines is handed over by the applicant to sub-contractors. It appears that the said work done by the contractors would be a works contract service. We find that under Section 17 (5) (d) of the Act, goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account, including when the goods or services are used for furtherance of business is not admissible. We find that the EHV Sub Stations and EHV Lines are embedded to earth and can be dismantled only by destroying the structure and cannot be shifted from one place to another place and therefore the said goods which are embedded to earth shall be considered as an immovable property. The term 'Plant and Machinery' has been defined in the explanation under Section 17 as apparatus, equipment and machiner....
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.... Dedicated Consumers on receipt of payment of consideration in the form of adjustable deposit. We find that the nature of service as informed by the applicant is as under:- i. Nature of contract: in this case, concerned Dedicated Consumers for the dedicated transmission bay/express feeder for uninterrupted electricity supply approach the MSETCL for construction of new transmission / electrical bay. For example, IT Hub approaches the MSETCL for construction of the new bay towards dedicated/uninterrupted power supplies for their IT Set-up. ii. Consideration: The respective ORC Consumer makes remittance (Deposit) of cost of construction of new transmission / electrical bay along with supervision charges to MSETCL. iii. Execution of contract: MSETCL further award the contract to the contractor for construction of new transmission / electrical bay by floating a tender. iv. Consideration paid to contractor: Contractor raises Running Account Bills, including GST as per stages of completion of work. v. Capitalization of property in assets: After the completion of work the Asset so created is adjusted against the remittance received from dedicated user/consumer. The Asset is capi....
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.... as incidental or ancillary activity. Therefore, we find that the provisions of S.No.25A of Notification No. 12/2017 dated 28.6.2017, as amended, from time to time, would not be applicable to the services provided by the applicant of setting up of a feeder bay for the dedicated consumer. This is also not covered by entry 25 of the notification no. 12/2017 dated 28.06.2017 which only covers the services of transmission of electricity and not creation of infra for such transmission. The services provided by the applicant of setting up of infrastructure for transmission of electricity are more akin to managing the construction of infrastructure for provision of supply of electricity by providing skills of engineering, project management and supervision of the actual construction. The services provided by the applicant of setting up of infrastructure for transmission of electricity are more akin to managing the construction of infrastructure for provision of supply of electricity by providing skills of engineering, project management and supervision of the actual construction. Supply has been defined under the CGST Act under Section 7 as all forms of supply of goods or services or both....
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....er the provisions of Section 16 and 17 of the CGST Act, 2017. Subject to the fulfilment of all the conditions laid down under Section 16, the applicant would be entitled to avail the ITC if it is not restricted under Section 17 of the CGST Act, 2017. We find that the work of construction of feeder bay is handed over by the applicant to sub-contractors. It appears that the said work done by the contractors would be a works contract service. We find that under Section 17 (5) (d) of the Act, goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account, including when the goods or services are used for furtherance of business is not admissible. We find that the feeder bay which comprises of transformers, transmission towers and structures are permanent structures embedded to earth and can be dismantled only by destroying the structure and cannot be shifted from one place to another place and therefore the said goods which are embedded to earth shall be considered as an immovable property. The term 'Plant and Machinery' has been defined in the explanation under Section 17 as apparatus, equipment and mach....
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.... incurred for construction of the EHV Substations, shifting of transmission towers and feeder bay and if there is any excess recovered, the same is returned back. They only keep their 15% supervisory charges. In this regard, it would be necessary to examine the facts of each particular case and the provisions of Rule 33 of the CGST Rules, 2017. Rule 33 of the CGST Rules, 2017, reads as under: - Rule 33. Value of supply of services in case of pure agent. - Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely, - (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the serv....
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.... we find that the applicant does not fulfill the first three conditions. From the sample contract between the applicant MI and the recipient, it is seen that the entire work has to be carried out by the applicant. In one other contract, it is seen that the option was given to the consumer to decide whether the service should be on the basis of 15% Supervision charge basis or all work to be executed by MSETCL on 100% deposit basis and the approval is given for the work to be executed by MSETCL on 100% basis. Such contracts are 'cost plus contracts'. All the responsibility for completion of the work satisfactory lies on the applicant. They are not acting as agents of the recipient of the service. Secondly, the second condition that the applicant shall not hold any title to the goods or services provided by the sub-contractor also does not get satisfied as the applicant holds the title of all the goods and services supplied by the sub-contractor. In fact, the constructed asset is capitalized in the books of the applicant. Thirdly, such goods or services should not be used by the agent for his own interest. In the instant case, the constructed sub stations, transmission lines etc., are....
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...., but taking into consideration the fact that transmission of electricity through a feeder bay is a dedicated and sophisticated task which will be handled by the transmission utility i.e. the applicant and such tasks would not be handed over to consumers of the electricity. Thus, it can be safely concluded that the activity of allotment of feeder bay to the consumer for a consideration which is equal or the present cost of construction of the said asset is an activity which is in the nature of renting out of an immovable property. We have already discussed hereinabove that the feeder bay constructed by the applicant is an immovable property and therefore allotment of the same for use by the dedicated consumer for a consideration, for a specified period would amount to supply of services. Further, these services are hot akin to renting out of meters, testing of transformers etc. These bays are major infrastructural assets and allotment of these bays to a dedicated consumer is necessary to ensure uninterrupted flow of electricity at required voltages to the consumers. Without these bays, it would not be possible to provide the service of transmission of electricity to the specified c....
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.... is asked because the works get completed even after a lapse of 2-3 years. It would not be out of place to mention that the amount received by the applicant is in respect of the services provided by them for setting up of Sub Stations, Shifting of transmission lines and construction of feeder bay etc. 4.15 After getting request from Dedicated Consumer for transaction enlisted above, the applicant gives estimated value of work to be done along with applicable GST and asks the dedicated consumer to deposit whole amount into applicant's account. Then, applicant issue invoice to Dedicated Consumer along with applicable GST. Some time, estimate given and amount received from the end users becomes excess on the final completion of the works and the excess amount is refunded back to the Dedicated Consumers. The, question raised is whether credit can be claimed for the purposes of GST liability in respect of the said amount refunded. To claim credit, Applicant has to issue credit note to Dedicated Consumer. As per section 2 (37), "credit note" means a document issued by a registered person under sub-section (1) of section 34. The provisions of Section 34 (1) and (2) are as under- 1. Wh....
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....any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient [one or more debit notes for supplies made in a financial year] containing such particulars as may be prescribed. (4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in such manner as may be prescribed. Explanation.- For the purposes of this Act, the expression "debit note" shall include a supplementary invoice. In view of the above provision, it is clear that any person who issues a debit note in relation to a supply of goods or services or both shall declare the details of such debit note in the return for the month during which such debit note has been issued and the tax liability shall be paid accordingly. Further, a supplementary invoice can also be issued instead of a debit note. 5. In view of the....
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....fiable under Heading 998339 .. Such services are chargeable to 18% GST (9% SGST + 9% CGST). c. Whether ITC on the running bills received from the contactor can be claimed by MSETCL? If ITC can be claimed by MSETCL, then whether ITC can be claimed in the period in which the running bill is received or on the receipt of the final invoice/completion of entire work? Answer: Not answered due to generic nature of the question. d. What shall be the value of supply at a particular moment when consideration is received? Answer: Value of supply shall be the value determined under Section 15 of the CGST Act, 2017. 1(c) Whether the following works undertaken by MSETCL can be termed as "supply" to the Dedicated Consumers? c. Construction of new transmission bay/express feeder for dedicated use of Consumer by MSETCL through a contractor on the request of the Dedicated Consumers on receipt of payment of consideration in the form of adjustable deposit. Answer: Yes. 2(c) If the works are decided as "supply, then: a. What shall be the time of supply? Answer: Time of Supply shall be the time prescribed under Section 13 of the CGST Act, 2017. b. What shall be the HSN/SAC Code and ....