TaxTMI 
TaxTMI 
TaxTMI 
WHEELING CAHRGES AND GST LIABILITY
X X X X Extracts X X X X
X X X X Extracts X X X X
....HEELING CAHRGES AND GST LIABILITY<br> Query (Issue) Started By: - Sadanand Bulbule Dated:- 10-7-2025 Last Reply Date:- 13-7-2025 Goods and Services Tax - GST<br>Got 8 Replies<br>GST<br>Dear experts Entry No. 25 of Notification No.12/2017-CTR dated 28/06/2017 provides tax exemption on the following services: 25 Heading 9969 Transmission or distribution of electricity by an electricity transmission or distribution utility. Electricity transmission and distribution utilities are defined under the Electricity Act, 2003. Under open access scheme, wheeiing of electricity means to use the transmission and distribution network by a third party, usually a generator of power, to deliver it to a consumer. Tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....smission /distribution licensees allow others to wheel power throuhg the network and for such usage, charges are recovered by the dstribution utilities. As such it is not in the nature of transmission and distribution of electricity by the notified utiliities. Admittedly such wheeling cahrges are not included in the above entry for tax exemption. However some AARs have held that, wheeling charges are also on par with the transmission and distribution of electricity covered by the above entry and therefore exempt from tax. In my understanding, admittedly wheeling charges are for allowing third parties to make use of network infrastructure. So they are not covered under Entry No 25 of Notification No. 12/2017-CTR da....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 28/06/2017. Meaning wheeling charges attract tax at 18% since such charges being under contractual obligation with third parties are not part of distribution of electricity the utilities. Experts to open moonlight. Reply By KASTURI SETHI: The Reply: Dear Sir Ji, In my view, exemption is available. Pl. study deep the literal meaning of the terms, "Transmission or distribution". and "wheeling charges". The wheeling activity/process cannot be isolated from the phrase, "Transmission or Distribution" Reply By YAGAY andSUN: The Reply: Legal Position on GST Applicability on Wheeling Charges Entry No. 25 of Notification No. 12/2017-CTR dated 28.06.2017 exempts "transmission or distribution of electricity by an electricity tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsmission or distribution utility." Utilities are defined per the Electricity Act, 2003. Wheeling charges are levied by transmission/distribution licensees to allow third-party generators to use their network under the open access regime. These are infrastructure usage charges, not direct electricity supply. The central question is whether such wheeling services form part of exempt transmission/distribution or are independent services liable to GST at 18%. Rulings Supporting Exemption: * Chamundeshwari Electricity Supply Corp. (Karnataka AAR & AAAR) - 2023 (2) TMI 1083 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA - 2020 (4) TMI 869 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA - Held that wheeling and banking charges, being part....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of a tariff approved by the regulator and essential to distribution activity, are exempt under Entry No. 25. * Uttarakhand Power Corp. (2018 (11) TMI 1758 - AUTHORITY FOR ADVANCE RULING - UTTARAKHAND) - Ruled that wheeling, cross-subsidy, banking, and additional surcharges levied by utilities under open access are part of distribution and hence exempt. Rulings Suggesting Taxability: * Courts have held that charges like meter rent, supervision, or infrastructure deposits (e.g., DCW) are not exempt as they are not integral to transmission/distribution. Analysis: Where wheeling charges are: * Levied by a notified utility, * Approved by SERC/CERC, and * Form part of the regulated open access infrastructure, ...they may qualify as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... part of the composite supply of electricity distribution and be exempt. However, if such charges are contractual, unregulated, or levied by private parties, they may fall outside Entry No. 25 and attract GST at 18%. Conclusion: Wheeling charges by electricity utilities under open access, if tariff-based and approved by regulators, are exempt. Charges outside this regulated framework are likely taxable. Each case requires examination of the nature of the supply, the supplier's status, and regulatory approval. Reply By Sadanand Bulbule: The Reply: Dear Sirs For academic purpose, plz refer Tamil Ndau AAAR Appeal No. 02/2024/AAAR dated 06/06/2024 rendered in the case of M/s. Tamil Nadu Generation and Distribuion Corporation Ltd, Chennai ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- 2024 (7) TMI 359 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU which covers the subject matter in detail. Reply By Sadanand Bulbule: The Reply: 2024 (3) TMI 672 - AUTHORITY FOR ADVANCE RULING, TAMILNADU - IN RE: M/S. TAMIL NADU GENERATION AND DISTRIBUTION CORPORATION LIMITED Reply By KASTURI SETHI: The Reply: Dear Sir Ji, Any AAR or AAAR has no precedential value but it has persuasive value, Such advance Ruling is meant for applicant only. The concept of composite supply is applicable to the present scenario and hence exemption is admissible. Reply By Sadanand Bulbule: The Reply: Dear Sirs Respectfully agreed. Reply By YAGAY andSUN: The Reply: Advance Ruling are Order in Personam, but not order in Rem. Just for....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... gags - In VAT Scenarios Different States used to issue different AAR orders on the same issues - GST is a old wine in a new bottle - Therefore impact and aftermath is eternal. :) Reply By Harshaditya Kabra: The Reply: Current Legal Position Wheeling charges are generally exempt from GST under Entry 25 of Notification No. 12/2017-CTR based on: * Multiple High Court decisions striking down contrary circular provisions * Consistent AAR rulings holding wheeling charges as exempt * Composite supply doctrine treating ancillary services as part of exempt principal supply Recommended Approach * Claim Exemption: Utilities should claim exemption for wheeling charges based on established precedents * Maintain Documen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tation: Keep detailed records showing the nexus between wheeling charges and transmission/distribution services * Monitor Developments: Stay updated on any appeals or regulatory changes * Seek Professional Advice: Given the evolving nature of the law, consult tax professionals for specific situations Expert Opinion While your understanding that wheeling charges are for allowing third parties to use network infrastructure is technically correct, the legal consensus from High Courts and AARs establishes that such charges are exempt from GST when they form part of the composite supply of transmission/distribution services. The courts have consistently held that the principal supply (transmission/distribution)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and ancillary services (including wheeling) cannot be artificially separated for tax purposes.<br> Discussion Forum - Knowledge Sharing ....