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IN THE HIGH COURT OF DELHI AT NEW DELHI
Before Vibhu Bakhru, Amit Mahajan, JJ.
Bses Rajdhani Power Ltd. & Anr. - Appellants
Versus
Union of India & Ors. - Respondents
W.P.(C) 9455 of 2018 & CM APPL. 62085 of 2023
Decided On : 13-12-2023
GST - Electricity Distribution - Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - [Chapter, Section Heading, Group or Service Code (Tariff) Description of servicesRate (per cent) Condition25 Heading 9969Transmission or distribution of electricity by an electricity transmission or distribution utility. NilNil] - The court considered the exemption of transmission or distribution of electricity from GST under Notification No. 12/2017-Central Tax (Rate) and the applicability of GST on certain charges collected by the petitioners. The court relied on the decision of the Gujarat High Court in Torrent Power Ltd. v. Union of India and concurred with the finding that the charges were an integral part of the distribution of electricity and therefore not chargeable to GST.
Fact of the Case:
The petitioners challenged the clarification issued by the Government of India regarding the applicability of GST on certain charges collected by electricity distribution utilities. The petitioners sought exemption from GST under Notification No. 12/2017-Central Tax (Rate) for activities undertaken in accordance with the provisions of the Electricity Act, 2003.
Finding of the Court:
The court found that the charges in question were integral to the distribution of electricity and therefore not chargeable to GST. The court directed the refund of any GST collected by the petitioners after a certain date and clarified that customers were entitled to seek refund of GST paid prior to that date.
Issues: The issues revolved around the applicability of GST on charges collected by electricity distribution utilities and the interpretation of Notification No. 12/2017-Central Tax (Rate) in relation to the exemption for transmission or distribution of electricity.
Ratio Decidendi: The court relied on the decision of the Gujarat High Court in Torrent Power Ltd. v. Union of India, which concluded that the charges in question were an integral part of the distribution of electricity and therefore not chargeable to GST. The court also emphasized the need to refund any GST collected after a certain date and clarified the rights of customers to seek refund of GST paid prior to that date.
Final Decision: The court concurred with the decision of the Gujarat High Court and directed the refund of any GST collected by the petitioners after a certain date. The court also clarified the rights of customers to seek refund of GST paid prior to that date.
Vibhu Bakhru, J. (Oral)
1. The petitioners have filed the present petition, inter alia, praying as under:
"(a) Quash and set aside the clarification issued in para 4(1) of the Circular No. 34/8/2018-GST dated 01.03.2018 by the Government of India.
(b) Declare that in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, all the activities undertaken by a distribution utility/licensee in accordance with the provisions of the Electricity Act, 2003 are exempt from levy of tax under the Central Goods and Services Tax Act, 2017 and Delhi Goods and Services Tax Act, 2017.
(c) In the alternative, declare that declare the charges such as application fee, meter rent, testing fee, etc collected by the Petitioners are part of composite supply of which principal supply is the actual distribution of electricity and therefore the entire composite supply is exempt from tax under Entry 25 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017;
(d) In the alternative, declare that the Clarification issued in para 4(1) of the Circular No. 34/8/2018-GST dated 01.03.2018 by the Government of India would be applicable prospectively.
(e) Pass such further orders as may be deemed fit and proper in the facts and circumstances of the present case."
2. The Central Government in exercise of its powers under Section 11 of the Central Goods and Services Tax Act, 2017 (hereafter `the CGST Act'), had issued a notification being Notification No.12/2017 Central Tax (Rate) dated 28.06.2017. In terms of the said notification, the intra-State supply of services (transmission or distribution of electricity by an electricity transmission or distribution utility) is exempted from the Goods and Services Tax (GST). Serial No. 25 of the said notification is extracted below:
| S. No. | Chapter, Section Heading, Group or Service Code (Tariff) | Description of services | Rate (per cent) | Condition |
| 25 | Heading 9969 | Transmission or distribution of electricity by an electricity transmission or distribution utility. | Nil | Nil |
3. It is stated by the petitioners that in terms of the said notification, the petitioners being electricity distribution utilities, were neither collecting GST from its customers for the supplies nor depositing the same with the GST authorities.
4. The petitioners are essentially aggrieved by the issuance of the circular being Circular No. 34/08/2018-GST dated 01.03.2018 (hereafter `the impugned circular'). In particular, the petitioners are aggrieved by the clarification issued at serial No. 4 of the impugned circular. The same is extracted below:
| 4. | (1) Whether the activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are exempt from GST? | (1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017 CT (R), Sl. No. 25. The other services such as: |
5. In terms of the impugned circular, it is clarified that the certain charges collected by the petitioners are not covered under the notification No.12/2017-Central Tax (Rate) dated 28.06.2017.
6. According to the petitioners, the charges as referred above are included in the charges for p
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