Tata Power Delhi Distribution Limited vs. Union Of INDIA & Ors.

Facts

The petitioner, Tata Power Delhi Distribution Limited, filed a writ petition challenging Circular No. 34/8/2018-GST dated 01.03.2018. This circular clarified that while the transmission and distribution of electricity services are exempt from GST, other related services like application fees, meter rental, testing fees, labour charges for shifting connections, and duplicate bill charges are taxable. The petitioner argued that these bundled services should be treated as part of the principal supply of electricity, which is exempt. The Gujarat High Court in Torrent Power Ltd. v. Union of India had previously struck down this circular. This Court, in BSES Rajdhani Power Ltd. & Anr. v. Union of India & Ors., had also concurred with the Gujarat High Court's view, holding that bundled supplies integral to electricity distribution are not chargeable to GST.

Held

The Court held that the controversy raised in the present petition was squarely covered by the decisions of the Gujarat High Court in Torrent Power Ltd. v. Union of India and this Court's own decision in BSES Rajdhani Power Ltd. & Anr. v. Union of India & Ors. The Court noted that the impugned circular had already been struck down by this Court in the BSES Rajdhani Power Ltd. case. The primary question of whether ancillary charges for the supply and distribution of electricity are taxable at a rate other than NIL, pursuant to Notification No. 12/2017-Central Tax (Rate), had been answered in the negative by the aforementioned judgments. Consequently, the Court found no further orders were required to be passed. The Court declined the respondents' request for an adjournment as the matter was already decided by this Court and no stay had been granted by the Supreme Court.

Key Issues

1. Whether the impugned Circular No. 34/8/2018-GST dated 01.03.2018, which taxes certain ancillary charges related to electricity supply, is liable to be struck down in light of the exemption provided for the principal supply of transmission and distribution of electricity under the CGST Act, 2017 and Notification No. 12/2017-Central Tax (Rate)? Petitioner's contention: The petitioner argued that the services enumerated in the impugned circular, such as application fees, meter rental, testing fees, and charges for shifting connections, are composite supplies intrinsically linked to the principal supply of transmission and distribution of electricity. As per Section 8(a) of the CGST Act, 2017, the tax liability for composite supplies should be determined based on the principal supply, which in this case is the exempt supply of electricity. Therefore, these ancillary charges should also be treated as exempt from GST. Revenue's contention: The respondents did not dispute the prior judgments but requested an adjournment, stating that they had appealed the Gujarat High Court's decision in Torrent Power Ltd. before the Supreme Court and intended to appeal this Court's decision in BSES Rajdhani Power Ltd. However, no stay order had been granted by the Supreme Court.