2026-VIL-1247-TEL
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VAT High Court Cases

Andhra Pradesh VAT Act, 2005 - Taxability of service line charges and development charges collected by an electricity distribution company under Section 4(8) of the APVAT Act as transfer of the right to use goods - Petitioner, a distribution licensee under the Electricity Act, 2003, extended service lines and developed distribution infrastructure comprising electric poles, transformers and cables for applicants, and recovered the cost of the goods under the heads of service line charges and development charges - Respondent held that there was a transfer of the right to use goods and levied tax on the turnover under Section 4(8) of the APVAT Act - Whether the recovery of service line charges and development charges from consumers amounts to a transfer of the right to use goods exigible to tax under Section 4(8) of the APVAT Act - HELD - The mere recovery of the cost of materials does not by itself establish that the right to use the goods was transferred to the consumers. The poles, transformers and cables continued to remain under the control and maintenance of the Petitioner, and the consumers were not entitled to interfere with or operate the equipment – The continued ownership and control are relevant factors, and the issue cannot be decided merely on the basis of recovery of cost or installation of the equipment. However, the entire cost of the goods used in developing the infrastructure was recovered from the respective applicants, the infrastructure was developed exclusively for their use, and such activity was ancillary to the principal business of supplying electricity. Viewed in its entirety, the nature of the transaction establishes a transfer of the right to use the goods, as transfer of ownership is not necessary and the transfer of the right to use is sufficient to attract the levy - The tax levied on the value of the goods recovered is exigible at the applicable rates under Section 4(8) of the APVAT Act – The question is answered in favour of the Respondent and the writ petition is dismissed
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