APPLICABILITY OF GST ON THE POWER TRANSMISSION

Abstract Under the new GST regime, while various goods & services have been covered for charging GST under various rates, certain goods & services have been excluded from the GST regime. Transmission and distribution of electricity by transmission and distribution utility is exempt from GST. India being the third largest producer and third largest consumer of electricity, the impact of no GST on above is to be noted with regard to the 3 sub sectors of power sector- power generation, transmission and distribution. This article analyses the impact of GST on the Power Sector as well as educate the reader about generation, transmission and distribution of electricity. Finally, overall impact of no GST on power sector and consumers has been analysed.

- CMA Rashmita Mukherjee

INTRODUCTION

GST was introduced w.e.f the midnight of 1st July 2017 in India on the supply of goods & services. Under the GST regime, various indirect taxes were subsumed, thus eliminating cascading effect of taxes. This led to the “One Nation One Tax” concept.

GST was introduced as divided into various tax slabs for collection of tax- 0%, 5%, 12%, 18%, 28% based on the type of goods or services.

While most of the goods and services are covered under the GST regime, certain goods & services are exempted from GST (those covered under exemptions).

ELECTRICITY - A GOOD OR A SERVICE?

A customer’s electric meter measures the amount of electricity sent from the electricity provider and consumed by the consumer. So, electricity can be termed as “goods”, it being ‘moved electricity’ being used to generate the customer’s bill. [Under the Uniform Commercial Code (UCC), “goods” means all things which are movable at the time of identification to the contract for sale]

On the other hand, it can be argued that if electricity exists in a high voltage transmission line, then electricity will notbe “goods” as per the UCC.

The Hedger Court focussed more on the existence of atransaction as opposed to the characteristics of electricity.

APPLICABILITY OF GST ON ELECTRICITY

As per Notification 12/2017-Central Tax (Rate), the Central Government has exempted the intra state supply of certain services. Similar exemption has been provided under Section 6 of the IGST Act, 2017 vide entry no. 26 of Notification No. 9/2017-Integrated (Rate) dated 28.06.2017.