Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO Ltd) & TANTRANSCO Ltd. are two subsidiary companies of TNEB Ltd. (Holding company), and both are registered utilities for distribution and Transmission of Electricity respectively under the Electricity Act, 2003.
TANGEDCO had filed an application before Tamil Nadu Authority of Advance Ruling (AAR) on ruling on applicability of GST on various transactions and as to whether TANGEDCO is a Government Entity or not.
Tamilnadu AAR had recently given its ruling in this regard. For ready reference of our readers the issue wise summary of the ruling of Tamilnadu AAR is as under:-
A. Applicability of GST on the various transactions between TANGEDCO Ltd. & TANTRANSCO Ltd.
1. GST is applicable on the following transactions as the same are ‘supply of goods’ to TANTRANSCO:-
a. Supply of Operation and maintenance materials used in the regular day to day functioning; and
b. Transfer of capital Assets
The exemption under SI.No. 25 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is not applicable on above as exemption is only applicable to services involving distribution of electricity, maintenance of electric meters by a distribution utility.
2. GST is applicable on the deployment of employees to TANTRANSCO as the same is supply of Service. The exemption under SI.No. 25 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended is not applicable as this is a supply of ‘Manpower Service’ and not a service involving mere distribution of electricity.
3. GST is not applicable on the following as the same are transaction in money:-
a. Transactions of physical fund flow between the companies by the way of repayment of existing loan, availment of fresh loans, etc. on actual basis without any interest component on such fund flow.
b. Income such as transmission charges, Scheduling and Systems Operating charges, Reactive Energy Charges, etc. received from open access consumers by the applicant and adjusted through payable to TANTRANSCO.
4. On the non-payment of long term open access transmission charges payable to TANTRASCO, no ruling is offered as the applicant is not the person supplying the service and Advance Ruling is a decision in relation to the supply undertaken by the applicant as per Section 95(a) of CGST/TNGST Act 2017.
B. Applicability of GST on Deposit Contribution Works
Depository Contribution Works (DCW) involve shifting service/line, Structure and equipment as per the request of the consumer, the charges for which are billed separately from the consumer. The works undertaken are Installation of transformers/lines and other accessories and are in the nature of installation of the structure and equipments classifiable under SAC 99873. Accordingly the applicable rate of tax is CGST @ 9% as per SI.No. 25 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST @ 9% as per SI.No. 25 of Notification No. II (2)/ CTR/ 532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended and the same is not exempted.
C. Whether TANGEDCO ltd can be considered a “ Government Entity”
TANGEDCO is a ‘Government Entity’ as defined under Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 as amended and 12/2017-C.T.(Rate) dated 28.06.2017 as amended by Notification No. 31/2017-Central Tax (Rate) dated 13.10.2017 and Notification No. 32/2017-C.T.(Rate) dated 13.10.2017 effective from 13.10.2017
D. Applicability of GST on Transmission Charges for Natural Gas.
The applicability of GST on the Transmission Charges billed by GAIL is not answered as not admitted, under sub-section (2) of section 98 of the CGST Act, 2017 and the TNGST Act, 2017 read with Section 95(a) of the Act.
For ready reference of our readers the order of Tamilnadu AAR is given below:
Further for future reference the order can also be downloaded from below:
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