Torrent Power Ltd. VS Union of India

The petitioner, a public limited company, has approached this Hon’ble Court seeking relief concerning certain charges related to electricity transmission and distribution. They request the Court to strike down a clarification issued by the Government of India, as it contradicts provisions of GST Acts and related notifications. They argue that charges such as application fees, meter rent, and testing fees collected by them are exempt from GST under Entry 25 of Notification No.12/2017. Alternatively, they propose that if these charges are considered part of a composite supply with electricity as the principal supply, the entire composite supply should be exempt. Furthermore, they seek a declaration that the impugned clarification should only apply prospectively, with the previous circular from 7.12.2010 being applicable for the period before 1.3.2018. Additionally, they request the Court to issue a writ directing the respondents to cease proceedings initiated based on the impugned circular.

The petition before the Hon’ble Court pertains to several issues surrounding the taxation and regulatory framework applicable to the petitioner company, a public limited company engaged in the generation, transmission, and distribution of electricity in the State of Gujarat, registered under the Goods and Service Tax (GST) Acts. The primary contention revolves around the validity of a clarification issued by the Government of India in Circular No.34/8/2018-GST dated 1.3.2018.

The petitioners seek various reliefs from the Court:

A. They request the Court to declare the clarification issued in para 4 (1) of the aforementioned circular as ultra vires the provisions of the GST Acts and the notifications issued thereunder.

B. The petitioners ask for a declaration that charges such as application fees, meter rent, testing fees, etc., collected by them for activities closely connected with the transmission or distribution of electricity are exempt from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017.

C. Alternatively, they seek a declaration that these charges are part of a composite supply, with the principal supply being the actual supply of electricity, and therefore the entire composite supply is exempt from tax under the same entry of the notification.

D. Without prejudice to the above, they request that if the clarification is upheld, it should only be applicable prospectively, and for the period prior to 1.3.2018, the respondents should be bound by the previous circular dated 7.12.2010.

E. Lastly, they request the Court to issue a writ of mandamus or any other appropriate writ or order directing the respondents to drop proceedings initiated based on the impugned circular.

The petitioners argue that as per the Electricity Act, they are mandated to supply electricity to consumers who apply for connections within a specified period. Consumers are required to pay registration charges at the time of application. Additionally, it is the duty of the distribution licensee, as per the Electricity Act, to provide electric plant or lines for supplying electricity to consumers’ premises if required.

The petitioners contend that the charges collected by them, including application fees, meter rent, testing fees, etc., are directly linked to the provision of electricity services and therefore should be exempt from GST. They argue that the impugned circular wrongly subjects these charges to GST, contrary to the provisions of the GST Acts and notifications.

The petitioners assert that the impugned circular creates uncertainty and adversely affects their business operations. Hence, they seek relief from the Court to protect their rights and interests in accordance with the law.

The petition submitted to the Hon’ble Court entails multiple pleas aiming to challenge certain aspects of the GST Acts and related circulars, alongside elucidating the operations and charges levied by the petitioners, a public limited company engaged in electricity generation, transmission, and distribution primarily in the State of Gujarat.

The petitioners seek the following reliefs from the court:

A. Writ Striking Down the Impugned Circular: The petitioners request the court to issue a writ to declare a clarification issued by the Government of India, as mentioned in para 4(1) of Circular No.34/8/2018-GST, as ultra vires the provisions of the GST Acts and associated notifications.

B. Declaration of Exemption from Tax: The petitioners seek a declaration from the court stating that charges such as application fees, meter rent, testing fees, etc., collected by them concerning activities closely connected with the transmission or distribution of electricity are exempt from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017.

C. Alternative Declaration of Exemption: Alternatively, the petitioners propose that these charges are part of a composite supply, where the principal supply is the actual supply of electricity, hence the entire composite supply should be exempt from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017.

D. Prospective Application of Circular: Without prejudice to the above, the petitioners suggest that if the clarification issued in the impugned circular is upheld, it should only be applicable prospectively. They argue that for the period before 1.3.2018, the respondents should adhere to the previous circular dated 7.12.2010.

E. Issuance of Writ Mandating Dropping Proceedings: The petitioners urge the court to issue a writ of mandamus or any other appropriate writ or order directing the respondents to cease any proceedings initiated based on the impugned circular.

Moving on to the factual background, the petitioners, a public limited company engaged in electricity generation, transmission, and distribution primarily in Gujarat, operate under the regulations outlined in the Electricity Act, 2003. As per Section 43 of the Electricity Act, the petitioners are obligated to supply electricity to consumers within a specified period upon receipt of applications. Consumers are required to pay registration charges, and additional charges may apply for extending electricity connections.

Furthermore, Section 43(2) mandates the petitioners to provide electric plant or electric lines if required, with charges determined by the Appropriate Commission. Section 45(3) specifies that charges for electricity may include charges for actual electricity supplied, rent for electric meters, or other related charges. Additionally, Section 46 empowers the State Commission to authorize the petitioners to charge expenses reasonably incurred in providing electric lines or plants.

In summary, the petition seeks legal recourse against certain GST-related matters while also elucidating the regulatory framework governing electricity distribution and associated charges under the Electricity Act, 2003.

Download PDF:

For Reference Visit:

Read Another Case  Law:

GST Case Law: