TaxTMI 
TaxTMI 
2026 (2) TMI 647
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....or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as the 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 Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. INDIGRID 2 PRIVATE LIMITED, IndiGrid Infrastructure Trust, 10th Floor, Berger Tower, C-001/A2, Sector-16B, Gautam Buddha Nagar, Noida, Uttar Pradesh - 201301 (hereinafter called as the "Applicant") are at present unregistered under the GST Act in the State of Tamilnadu. The applicant has sought advance ruling on the following question: 1. Whether the activity of development and operation of BESS when such BESS is put on a standalone basis i.e. not with generation transmission and distribution utility, would amount to supply of electrical energy, and consequently be exempt from payment of GST in term....
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....utilities (co-located BESS). 6. As per BESPA, BESS project developer is entrusted with the responsibility to develop and operate BESS at multiple locations. BESS project operator has to keep the BESS ready for charging and further discharging and releasing the stored electricity as and when required by the transmission, distribution and trading agencies who in turn uses the electricity for its own purposes or for further sale. The applicant is also responsible for maintenance of transmission system up to the delivery point. The applicant is responsible to set up dedicated transmission network up to the delivery point at its own cost and it is undertaken based on customer requirements. Thus, all approvals, permits and clearances required for setting up of the BESS and dedicated transmission network up to the delivery point is within the applicant's scope of work. 7. For carrying out the said activity of storing and consequently discharging electricity/electrical energy, for both standalone or co-located systems, the applicant charges a fixed tariff every month based on the contracted capacity made available to the customer during the period of BESPA. The tariff is determined b....
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....very month based on the contracted capacity made available to the customer during the period of BESPA and the tariff is determined based on the terms of the BESPA executed between the applicant and their customers. 11. PROVISIONS OF ELECTRICITY ACT/RULES APPLICABLE AS STATED BY THE APPLICANT • The term 'Electricity' is defined under Section 2(23) of the Electricity Act to mean, 'electricity' means electrical energy- (a) Generated, transmitted, supplied or traded for any purpose: or (b) Used for any purpose except the transmission of a message; • Section 2(50) of the Electricity Act defines the term 'power system' to mean (50) "power system" means all aspects of generation, transmission, distribution and supply of electricity and includes one or more of the following, namely:- (a) generating stations; (b) transmission or main transmission lines; (c) sub-stations; (d) tie-lines; (e) load despatch activities; (f) mains or distribution mains; (g) electric supply-lines; (h) overhead lines; (i) service lines; (j) works; • ....
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....y' hence their activity should be treated as 'composite supply' of 'goods & services'. • Notification No. 02/2017-CT (Rate) dated 28-06-2017, vide SI. No. 104 have exempted the supply of electrical energy (treating it as goods) from the levy of GST. Likewise, Sl. No. 25 of Notification No. 12/2017-CT(Rate) dated 28-06-2017 prescribes NIL rate of tax for the services of transmission and distribution of electricity by an electricity transmission or distribution utility. • The applicant further stated that while the GST law specify the taxability of supply of electrical energy or the transmission and distribution of electricity, it does not provide clarity on the taxability of BESS or BESS projects. • The applicant cited the case of Association of power producers Vs Solar Energy Corporation of India Limited & Others (2024 (9) TMI 1009 - Delhi (HC) wherein the Hon'ble High Court of Delhi on the issue of BESS had observed that there is no provision under GST law and that the CBIC is required to issue clarification on the queries raised by the taxpayers directly. 13. PERSONAL HEARING The applicant was given an opportunity to be heard in person....
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.... 18. Electricity transmission is the process of transporting bulk electrical power over long distances from power plants to substations using high-voltage lines. The two primary modes of transmission are overhead lines, supported by towers, and underground cables. 19. Electricity distribution is the final stage of delivering electricity from substations to consumers, where high voltages are reduced to usable levels. 20. The essence of the agreement is to store the electrical energy during the peak generation period for use during demand. As of now, scientifically, electricity cannot be stored directly as such. However, it is converted into other forms of energy such as chemical Energy (batteries, hydrogen), mechanical Energy (flywheels, pumped hydro), or Thermal Energy (molten salt) for storage. The applicant here is using the method of converting the electrical energy to chemical form for storage. The applicant is receiving the electrical energy from the grid, storing it in the form of chemical energy using their resources. Therefore, applicant is not generating electrical energy from any of the sources either conventional or non-conventional. Hence, the applicant shall not....
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....torage System is not a part of the Power System. Clause (1) of Rule 18 of the Electricity (Amendment) Act, 2022, and Energy Storage System is considered a s part of a Power System'. The Ministry of Power, as per para 3 of the Circular No. 23/26/2021-R&R dated 29th Jan, 2022, states that ESS is a part of the power system defined under sub-section (50) of Section 2 of the Electricity Act, 2003. An Energy Storage System function only along with generation/transmission/ distribution entity. Hence, it may be inferred that stand alone BESS shall not be considered as cither generating or transmitting or distribution utility. 26. The next question is whether the electrical energy received and despatched by the applicant shall be treated as 'purchase' or 'supply'. Here as per the agreement, the contract is for certain number of years and the price is agreed between them for the entire period of contract. However, invoices are raised by the applicant on their customers namely, generation/ transmission/distribution utility on a monthly basis. That is the applicant is charging only for the usage of the BESS facility which has a specific capacity as required by their customers. Therefore, as....
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....o any utility engaged in generation or transmission or distribution; or to a Load Despatch Centre: Provided that the owner of the Energy Storage System may use part or whole of the storage space himself to buy and store electricity and sell the stored electricity at a later time or date. (6) The independent energy storage system shall be a delicensed activity at par with a generating company in accordance with the provisions of section 7 of the Act: Provided that if the owner or developer or lessee or tenant or user seeks to operate the Energy Storage System as an independent energy storage system, it shall be registered with the Authority and the capacity of such Energy Storage System shall be verified by the Authority. 29. The above provisions of the Electricity Rules specify only the status of an Energy storing System for the purpose of obtaining certification/permission (for generation) and license (required for transmission and distribution) for operating the system in conjunction with generating, transmitting and distribution utility as the Battery Energy Storage cannot function independently. This implies that the Energy Storage System is neithe....
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....ased tariff for the entire term of agreement is fixed per MW per year and will be billed by BESS on monthly basis. This is evident from the sample/proforma invoice provided by the applicant where the charges are based on monthly basis. 33. The terms 'standalone' and 'co-located' used in the trade parlance is only for the purpose of ownership of BESS facility. As per clause (4) of Rule 18 of the Electricity (Amendment) Rules, 2022, if the energy storage system is developed, owned, leased or operated by an independent energy storage service provider, it is termed as 'standalone'. Alternatively, if the energy storage system is owned and operated based on an agreement with a generation/transmission/ distribution utility, then it is termed as 'co-located'. In the co-located facility, the location, capacity and various other criteria are determined as agreed by the co-located entities namely, the applicant and a generation/transmission/distribution utility. Though location and capacity are determined by mutually agreed terms, the function of a BESS for storage of electricity is not altered and remains the same. Therefore, the development and operation of BESS both for standalone and c....