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2019 (2) TMI 1904 - AAR - GSTClassification of supply - Supply of goods or supply of services - electricity/ electrical energy is treated as supply of goods and intra-states supply thereof - supply of utilities/ leasing are separate supplies or composite supplies? - exemption from payment of CGST in terms of Serial Number 104 Notification No. 2/2017-CT(Rate), dated 28.06.2017 - eligibility of Input Tax Credit. Electricity - goods or service? - HELD THAT:- The Notification No. 2/2017-Central Tax (rate), dated 28th June, 2017 pertains to goods, the intra-state supply of which is exempted under the GST Act. The Entry No. 104 of this notification is regarding Electrical Energy. This suggests that Electrical Energy is a goods and not a service. There is also no doubt that electricity and electrical energy are one and the same thing - It is therefore, clear that electricity is a goods and not a service. Having ruled that electricity is goods, we come to the question whether supply of electricity via DG sets is a goods or service. The power backup provided by the Agilent Technologies i.e. the lessee is in the form of a service. The charges for this supply are determined by the lessee as per its convenience. The DG set belongs to the Agilent Technologies, the maintenance charges are also borne by the Agilent Technologies, the expenses record pertaining to the DG set is also maintained by Agilent Technologies. Therefore, the authority has no hesitation in concluding that the provision of electricity supply/power back-up via DG set is in the form of a service and not goods - the electrical supply is liable to GST to the extent it is supplied through DG set. Whether the supply of electricity and supply of utilities / leasing are separate supplies or composite supplies? - HELD THAT:- In the instant case, the supply is made by a taxable person and the number of supplies are also multiple. But as discussed earlier, the supply of electricity to the extent of it being supplied through grid is exempt from GST and, therefore, the condition of two or more taxable supplies is not satisfied. Further, the supply of utilities and supply of electricity are neither naturally bundled together nor are they supplied in conjunction with each other. Also, neither of the two supplies i.e. utility services and electricity supply can be termed as a principal supply and the other one being a natural ancillary - the supply of utility services and electricity supply are separate supplies - The provision of electric supply by way of DG set forms part of the utility services taxable at 18% whereas the supply of electricity by way of grid is exempt from GST. Input Tax Credit charged on renting services and electricity - HELD THAT:- It is understood that renting of business premises is indispensable for carrying any business, no matter how small the scale is. It is also admitted that renting of business premises is in the course and furtherance of business as space is required for carrying out the operations relating to business - it is observed that since the grid supplied electricity is exempt from GST, the issue of credit availability does not arise. As regards, the tax on supply of electricity through DG set, the Authority is of the opinion that the applicant is entitled to credit of input tax paid with respect to tax paid on availing the said service.
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