Service activity in relation to sovereign function entrusted to Municipality under article 243W of Constitution.
Company is engaged in business of generation, transmission and distribution of electricity. The company is required to digging trenches on roads and pay reinstatement charges to municipal authorities for restoring patches. A ruling is sought whether these charges are liable to GST or not.
The applicant claimed that such recovery of charges amounts to service activity in relation to sovereign function entrusted to Municipality under article 243W of Constitution and hence, exempt from GST. It is ruled that restoration work could be equated neither to construction work nor to maintenance work as suo motu undertaken by Municipal Authorities and thus GST is payable on such charges at rate of 18%.