2018 Taxo.online 103

WRIT TAX No. – 5343 of 2018 dated 05.04.2018





Central Goods and Service Tax Act 2017

Circular No. 131/ 13/ 2010 – ST dated 07.12.2010, Circular No. 34/8/2018-GST dated 01.03.2018

Mr. Akil Kureshi, Justice & Mr. B.N. Karia, Justice

In favour of assessee

High Court


Represented by: – 

Petitioner: – Mr Saurabh Soparkar SR Counsel, Mr Uchit N Sheth 


Order: – 

The petitioner no.1 is the electricity company engaged in generation, transmission and supply of electricity. Admitted position is that under the earlier VAT regime, transmission and distribution of electricity by an electricity transmission or distribution utility was exempted from payment of service tax. According to the petitioners, the Government clarification dated 7.12.2010 provided that “Supply of electricity meters for hire to the consumers being an essential activity having direct and close nexus with transmission and distribution of electricity, the same is covered by the exemption for transmission and distribution of electricity, extended under the relevant notifications”. Thus the petitioners previously did not have to recover and pay service tax on transmission and distribution of electricity including the other incidental services provided by them. 

In the new GST regime also the exemption has been provided in similar terms, as earlier, under heading 9969 where the exemption is for the following service : 

“Transmission or distribution of electricity by an electricity transmission or distribution utility” 

However, for the incidental or connected services, the Government of India has now issued a clarification dated 1.3.2018 in which it is provided that for all services such as application fee for releasing connection of electricity, rental charges against metering equipment, testing fee for meters, transformers, capacitors, etc, labour charges from customers for shifting of meters or shifting of service lines and charges for duplicate bill, such exemption would apply and such services are taxable. 

On the basis of such clarification, the departmental authorities have issued summons dated 28.3.2018 to the petitioner calling for information and documents which includes the petitioner’s balance-sheet for the financial years 2012-2013 to 2016-2017, bifurcation of income of various services for the same period and the petitioner’s bank statements for financial years 2012-2013 to 2017-2018 besides other information. 

Counsel for the petitioner submitted that when the exemption granted to the electricity companies under the earlier service tax regime has been continued under GST regime, the Government’s clarification in connection with the incidental services cannot be changed. In any case, the clarification cannot operate retrospectively and at any rate cannot apply to a period prior to introduction of GST. The action of the authority to call for information for the period as far back as the financial year 2012-2013 is therefore, wholly unjustified. 

Notice returnable on 3.5.2018. 

Till further orders, the petitioners shall not have to reply to such summons dated 28.3.2018. 

Direct service is permitted 


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