ADVANCE RULING ON TP AJMER DISTRIBUTION LTD: TAXABILITY OF ANCILLARY SERVICES

ADVANCE RULING ON TP AJMER DISTRIBUTION LTD: TAXABILITY OF ANCILLARY SERVICES

RAJASTHAN AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Case Title : M/s TP Ajmer Distribution Limited

(GST AAR RAJASTHAN)

Advance Ruling No. RAJ/AAR/2018-19/02

In Application No. Advance Ruling/CGST & SGST/2017-18/AR/02

Date of Judgment/Order : 11th May 2018

IMPORTANT PARAGRAPHS

Para No. 1. M/S TP Ajmer Distribution Limited (‘TPADL’ or •Applicant’ or ‘the Company’); having Goods and Services Tax (‘GST’) Registration No. 08AAGCT2158PlZR and is engaged in the business of distribution of electricity; has submitted that,

Para No. 1.1 The Tata Power Company Limited (‘TPCL’) has signed a Distribution Franchisee Agreement ( •DEA’) with Ajmer Vidyut Vitran Nigam Limited (AVVNL’) to cater to the power requirements of customers in Ajmer, Rajasthan for a period of 20 years. To serve the aforesaid purpose, TPCL has formed a Special Purpose Vehicle (‘SPV’) called TPADL, which will be responsible for operating and maintaining the distribution network in Ajmer City. It will also be responsible for managing the billing and collections in the said areas.

Para No. 1.3 They submitted that, the aforesaid non-tariff charges are fixed and recovered from the customers in accordance with the provisions of Electricity Act, 2003 and the regulations made in this behalf by the Rajasthan Electricity Regulatory Commission (State Commission) (‘RERC’). RERC has prescribed various regulations in terms of powers granted to it under the Electricity Act, 2003 for determination of the tariff and non-tariff charges, specify the obligations of a licensee etc.
Para No. 1.4 The applicant has also 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.

RULING

In light of clarification issued under Circular no. 34/8/2018-GST dated 01.03.2018 issued vide F.No. 354/17/ 2018-TRU and provisions of GST Act , The Services (as mentioned in para 1.2 above) provided by M/S TPADL with respect to the non-tariff charges recovered from their customers are not eligible for exemption and M/S TPADL is liable to pay tax on the aforesaid recovery made from their customers.