SC admits Revenue SLP for determining tax liability of electricity transmission/distribution ‘related services’

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Facts:

In the case of Torrent Power Ltd. vs Union of India [TS-858-HC-2018(GUJ)-NT], the Hon’ble Gujarat HC struck down Circular No. 34/8/2018-GST dated March 1, 2018 to the extent the same provides that activities related with transmission and distribution of electricity, such as application fee, testing fee, labour charges for shifting meters, etc., are taxable and not covered by S. No. 25 of the Exemption Notification No. 12/2017-CT(R) dated June 28, 2017.

The Gujarat HC observed that, from very manner in which Revenue treated said related services during pre-negative list regime, such services would stand covered by exemption granted to transmission and distribution of electricity by virtue of inclusion of such services in list of negative services u/s 66D(k) of the Finance Act, 1994 as well as Exemption Notification issued under the CGST Act, 2017 (“CGST Act”).

Further, the HC explained that circular only provides an interpretation of when service would stand included in another service which would not change merely because such exemption is now granted under some other provision. Consequently, services which stood included within the ambit of transmission and distribution of electricity during pre-negative list regime cannot now be excluded by merely issuing a clarificatory circular, that too, with retrospective effect. In this regard, the HC elucidated that “all these services are essential activities which have a direct and close nexus with transmission and distribution of electricity”.

Being aggrieved, the Revenue filed an SLP against the order passed by the Gujarat HC.

Issue involved:

Whether activities related to transmission and distribution of electricity, such as application fee, testing fee, labour charges for shifting meters, etc. are taxable or covered under exemption?

Held:

The Hon’ble Supreme Court has admitted the Revenue’s SLP Diary No(s). 24733/2019 dated August 9, 2019, and posted the matter in the third week of November 2019.

Citation: [TS-609-SC-2019-NT]