GST on Electricity Transmission? AAR’s Ruling Will Surprise You

The applicant, M/s. Maharashtra State Electricity Transmission Co. Ltd is engaged in the operation of the Electricity Transmission System in Maharashtra. It is one of the largest state-owned electricity transmission utilities in India. The main areas of the business include transmission of electricity, Construction and maintenance of Extra High Voltage (EHV) network, and Works for Dedicated Consumers.

Question Asked by Applicant

The applicant filed an application under Section 97 of the Central Goods and Services Tax Act, 2017, and the Maharashtra Goods and Services Tax Act, 2017, to get the advance ruling for the following question:

“1. Whether the following works undertaken by MSETCL can be termed as “supply” to the Dedicated Consumers?

2. If the following works are decided as “supply, then:

a. What shall be the time of supply?

b. What shall be the HSN/SAC Code and rate of GST for such “supplies”?

C. Whether ITC on the running bills received from the contactor can be claimed by MSETCL? If ITC can be claimed by MSETCL, then whether ITC can be claimed in the period in which the running bill is received or on the receipt of the final invoice/completion of entire work?

d. What shall be the value of supply at a particular moment when consideration is received?

3. In case, the deposit obtained from the end users becomes excess on the final completion of the works and the excess amount is refunded back to the Dedicated Consumers, then whether credit can be claimed for the purposes of GST liability in respect of the said amount? This question is asked because the works get completed even after a lapse of 2-3 years.

4. In case, the deposit obtained from the Dedicated Consumers falls short on the final completion of the works and if such amount is recovered from the end user, then whether we shall be liable to pay GST on the same and if yes, then what shall be the time of supply in this case? This question is asked because the works get completed even after a lapse of 2-3 years.”

What Did the Ruling Say?

As per the Maharashtra Authority of Advance Ruling:

• The works undertaken by MSETCL can be termed as “Supply” to the Dedicated Customers.
• The time of supply will be the time specified under Section 13 of the CGST Act, 2017, and the service would be covered under the head of service of agreeing to do an act for a consideration.
• Such supplies would be classified under the Heading 999792, and the applicable GST rate is 18% (9% SGST+9% CGST)
• The value of supply at a particular moment when consideration is received would be determined under section 15 of the CGST Act, 2017.
• In case the deposit received from the end users exceeds the final completion of the works and the excess amount is refunded back to the Dedicated Consumers, then credit cannot be claimed for GST liability.
• If the deposit received by the Dedicated Consumers falls short on the final completion of works and if such amount is recovered from the user, then the applicant is liable to pay the GST on the same amount, and the time of supply is the time at which the advance is received.

Click on the Link given below to read complete Ruling