2026-VIL-19-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Taxability of Battery Energy Storage System (BESS) - Applicant is engaged in the activity of developing and operating Battery Energy Storage System (BESS) for or on behalf of various transmission, distribution and trading agencies in India - The applicant charges a fixed tariff every month based on the contracted capacity made available to the customer during the period of the Battery Energy Storage Purchase Agreement (BESPA) - Whether the activity of development and operation of standalone BESS would amount to supply of electrical energy and be exempt from GST under Notification No. 02/2017-CT(Rate) dated 28-06-2017 – HELD - The essence of the agreement is to store the electrical energy during the peak generation period for use during demand. The applicant is not generating electrical energy from any of the sources either conventional or non-conventional. Hence, the applicant shall not be considered as a generating company - The standalone BESS shall only be treated as a storage unit for storing electricity in the form of chemical energy and selling/giving back to the buyer/customer. As the activity is not treated as generation of electricity, the applicant is not eligible for the exemption provided under Notification No. 02/2017-CT(Rate) dated 28-06-2017 - The activity of the applicant can be rightly classified as "support services to electricity transmission and distribution" under HSN code 998631 and are liable to pay GST at the rate of 18%. The applicant is required to obtain GST registration in the state of Tamil Nadu for discharging their GST liability if the BESS is established in the State – Ordered accordingly - Whether the activity of development and operation of co-located BESS would amount to supply of electricity and be exempt from GST under Notification No. 02/2017-CT(Rate) dated 28-06-2017 or be exigible to nil rate of duty under Notification No. 12/2017-CT(Rate) dated 28-06-2017 – HELD - The standalone as well as co-located BESS perform the same function, with the difference being in the ownership. As the development and operation of BESS, whether standalone or co-located, are not considered as a generation/transmission/distribution utility, the exemptions provided under Notification No. 02/2017-CT(Rate) dated 28-06-2017 and Notification No. 12/2017-CT(Rate) dated 28-06-2017 are not available to the applicant.
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