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GST – Payment of compensation in the form of supply of free power, Consideration – Petitioner is a power generation company, challenge order imposing GST and penalty of over Rs. 1000 crores for not paying GST on the free power it provides to State Governments as compensation for the distress caused by setting up of hydroelectric projects - Whether the free power supplied by the petitioner to State Governments can be considered as "consideration" for the licensing services provided by the Government, and therefore subject to GST, or is it in the nature of "compensation" not subjected to GST - HELD – There is prima facie merit in petitioner’s contention that the free power is in the nature of compensation and not consideration - In a similar matter under service tax the Additional Director General (Adjudication) adjudicated the show cause notice and dropped the demand of service tax proposed against the petitioner on the ground that the supply of 12% free power is in form of “compensation” in view of the power sharing letter and the arrangement between the State Governments and the petitioner for sharing of benefits. Thus, the Service Tax Department had held that the free power is compensation and not royalty - the GST authorities cannot take a different stand when the same Ministry (Finance) had previously taken the view that it is compensation and not consideration – prima facie, there a serious doubt as to whether the supply of free electricity is in the nature of “consideration” at all in order to subject it to GST or it is a “compensation” for distress caused by setting up of the Hydro-Electric Project; and that the respondents cannot impose GST on free electricity provided by the petitioner by treating the same as “consideration” towards the alleged services provided by the State Government as a supplier. Also taking into account the fact that the petitioner is a Government Company and huge liability is imposed on it by the respondents, though another department i.e., Central Excise Department of the Government, has taken a diametrical opposite, pending further orders, there shall be interim stay of all further proceedings pursuant to the impugned order – Ordered accordingly - Jurisdiction of High Court to entertain the writ petition even though the demand is against GSTINs across multiple States - HELD - since part of the cause of action arises within the territorial jurisdiction of this High Court, as the liability is imposed on petitioner’s power stations in Himachal Pradesh, this court would have the jurisdiction to entertain the writ petition - the contention of the respondents that the principle of forum conveniens should be applied, is rejected.
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