Chhattisgarh State Electricity Regulatory Commission vs. Union Of INDIA

Held

The High Court did not decide the merits of the contentions raised by either party. Instead, it directed that the petitioner shall appear before the GST Authority where the proceeding is ongoing. If arguments have already been concluded, one more opportunity is granted to the petitioner to raise the issue of the GST Authority's jurisdiction to issue the show cause notice. The GST Authority is directed to decide the matter in accordance with law, after giving the petitioner an opportunity of hearing, without being prejudiced by the fact that the writ petition has been disposed of. The Court explicitly stated that it had not examined the merit of the contentions.

Facts

The petitioner, Chhattisgarh State Electricity Regulatory Commission, filed a writ petition challenging a show cause notice dated 27.09.2023 issued by the Deputy Director, Directorate General of GST Intelligence, Raipur. The notice proposed a GST demand of Rs. 8,52,00,183/- at 18% under the category of ‘Support service to Electricity and Commission’ for the period from 01.07.2017 to 25.07.2023. The petitioner argued that its functions, as a Regulatory Commission constituted under the Electricity Act, 2003, do not fall under the ambit of taxable supply of goods or services as per Schedule III of the GST Act, 2017. The High Court, while admitting the petition, granted interim relief by staying the final order until the next date of hearing, directing the respondents to file their reply.

Key Issues

1. Whether the activities of the Chhattisgarh State Electricity Regulatory Commission, constituted under the Electricity Act, 2003, are taxable as 'supply of services' under the Goods and Services Tax (GST) Act, 2017, particularly in light of Schedule III of the Act which lists activities treated as neither supply of goods nor supply of services? Petitioner's arguments: The petitioner contended that its functions are not a 'supply of service' and therefore not liable for GST. They relied on Schedule III, item 2, which states that services by any Court or Tribunal established under law are not within the ambit of service. The petitioner argued that as a Regulatory Commission, its functions cannot be treated as a service or supply of service, rendering the show cause notice issued by the GST authority without jurisdiction. Respondent's arguments: The respondent sought time to file a reply. Subsequently, they prayed for dismissal of the writ petition, noting that no final order had been passed by the GST authorities in compliance with the interim order.