GST applicable on rental charges of electricity meters recovered by distribution utility: AAR

No Comments

Transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notificationNo.12/2017-CT (R), SI. No.25, however, non-tariff charges recovered by distribution utility, such as application fee for releasing connection of electricity, rental charges against metering equipment, testing fee for meters/ transformers, capacitors etc, labour charges from customers for shifting of meters or shifting of service lines, are taxable

• The applicant company (TPADL) is engaged in the activity of distribution of electricity. For the aforesaid service, distribution charges are recovered from the customers. In order to distribute electricity, TPADL carries out various activities and makes separate recoveries from its customers such as re-connection charges, connection transfer fee, Charges for duplicate bill, meter testing Fees, labour charges for shifting of meter in the same premises, charges for duplicate bill.

• The applicant has submitted that under the GST regime, as per Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017, exemption from levy of GST has been granted to the activity of Transmission or distribution of electricity by an electricity transmission or distribution utility. Corresponding notifications have also been issued under the IGST Act and SGST Act – Notification No. 9/2017 – Integrated Tax (Rate) dated 28.06.2017 and SGST-No. F 17(131) ACCT/GST/2017/6822 dated 29.06.2017.

• The question/ issue for determination are (i) Whether TPADL is eligible to avail the exemption from levy of GST under Entry No. 25 of Notification 12/2017 – Central Tax (Rate) dated 28.06.2017 bearing description ‘Transmission or distribution of electricity by an electricity transmission or distribution utility’ with respect to the non-tariff charges recovered by TPADL from its customers? And (ii) Whether TPADL is liable to pay tax on the aforesaid recovery made from its customer?

• Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notificationNo.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 distribution companies to consumer are taxable.

 Citation:[2018] 95 taxmann.com 61 (AAR- RAJASTHAN)