2024-VIL-111-AAR
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SGST Advance Ruling Authority

GST – Odisha AAR – Activity in relation to transmission or distribution of electricity - Taxability of “Deposit Work” undertaken by electricity distribution company – Whether “Deposit Work” and supervision charges received for supervision and monitoring of deposit work is an integral part of supply of services of transmission or distribution of electricity and exempted under Entry 25 of Notification No. 12/2017-CT(R) dated 28.06.2027. Alternatively, whether the ‘Deposit Work’ is incidental to the principal supply of transmission or distribution of electricity and form part of composite supply of services and by virtue of provisions of Section 8(a) of the CGST Act, 2017 has to be treated as a supply of the principal supply, namely, transmission and distribution of electricity and exempted from GST – HELD - the deposit work undertaken by the applicant are not naturally bundled with supply of electricity; rather they are executed and charged for by the applicant only if demanded or consumed by the customers - Further, the amount is recovered from the consumers as non-tariff charge. This shows that the services of transmission of electricity is independent of the deposit contribution works under taken by the applicant and accordingly do not fulfill all conditions specified in section 2(30) of the CGST Act, 2017 for the purpose of treating both the supplies as composite supply. Thus, the exemption notified for ‘transmission and distribution of electricity’ cannot be extended to the deposit contribution works (support services) undertaken by the applicant - The deposit works undertaken by the applicant is supplying support services to electricity transmission & distribution classified under SAC-998631 and chargeable to 18% GST in view of Entry Sl.no.25 of the Notification No. 11/2017-CT dated 28.06.2017 – Ordered accordingly - Eligibility to input tax credit - Whether applicant is eligible for ITC of GST paid to contractors on execution of deposit work and GST paid on materials and equipment supplied free of cost to the contractor – HELD - the works undertaken by the Applicant is for creation of the infrastructure which will be used for supplying supply of services of transmission or distribution of electricity for the furtherance of business. Therefore, ITC can be admissible to Plant and Machinery means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making outward supply of goods and services or both in accordance with the explanation provided under the third proviso to sub-section (5) of Section 17 of the CGST Act - If it is held that the applicant is eligible for ITC, whether any part of such input tax credit is required to be reversed under section 17(2) of CGST Act read with Rule 42 and 43 of CGST Rules, 2017 – HELD - Yes, input tax credit is required to be reversed under section 17(2) of CGST Act read with Rule 42 and 43 of CGST Rules.
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