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2024 (11) TMI 975 - AAAR - GSTGovernmental Authority or Local Authority - Government of Karnataka holds 99.99% of equity in the Corporation - exemption from filing of Annual Return in Form GSTR9 and Form GSTR9C - input tax credit on the inward supply of goods and services which are capitalized in the books of accounts - input tax credit on the inward supply of services against output taxable supplies of support and auxiliary services and other supply of taxable goods - input tax credit (on inputs input services and capital goods) proportionately on the taxable output supply of support services and goods (scrap etc.) - eligibility to claim taxes paid under RCM as input tax credit - levy of Additional Surcharge collected from Open Access Consumer - taxability of Wheeling and Banking Charges allowed by Commission (KERC) as 5% and 2% of the energy input into the distribution system by Open Access consumer. HELD THAT - The clause 8.5.4 of the Tariff Policy 2016 notified by the Ministry of Power Government of India provides that The additional surcharge for obligation to supply as per section 42(4) of the Act should become applicable only if it is conclusively demonstrated that the obligation of a licensee in terms of existing power purchase commitments has been and continues to be stranded or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract. The fixed costs related to network assets would be recovered through wheeling charges. As per National Electricity Policy an additional surcharge be levied for meeting the fixed cost of the distribution licensee arising out of his obligation to supply in cases where consumers are allowed open access. As per Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulation 2004 the open access customer shall be liable to pay such additional surcharge as may be determined by the Commission from time to time. It is also noticed that Regulation 3 of KERC (Electricity Supply) Code 2004 empowered the appellant to charge additional surcharge from their open access consumers. Thus it is apparent that the appellant is collecting additional surcharge as per the Electricity Act; Tariff Policy; National Electricity Policy of Ministry of Power Government of India and Karnataka Electricity Regulatory Commission (Terms and conditions for open Access) Regulation 2004 KERC (Electricity Supply) Code 2004 of Karnataka Electricity Regulatory Commission Government of Karnataka from the open access customers and therefore it forms part of tariff for the supply and distribution of electricity. It is found that collection of Additional Surcharge from OA consumers on the basis of quantum of energy wheeled from the private generators of OA consumers is only to meet the fixed cost of the appellant arising out of this obligation to supply. Such collection mechanism is backed by an Act and policies of Central Government as well State Government. In the instant case the Appellant has entered into agreements with their customers basically for supply of electricity - From the submissions of the appellant there are no independent arrangement entered into by the appellant for tolerating an act against which the consideration is collected as Additional Surcharge. It is found that such amounts do not constitute payment (or consideration) for tolerating an act rather these amounts are collected only to cover the fixed costs the appellant has to incur in terms of power purchase agreements they have entered into with power generating companies. The Additional Surcharge levied under Electricity Act from their customers who opted for sourcing electricity from open access over and above the consideration charged towards supply and distribution of electricity should form part of taxable value determined in terms of Section 15 of the CGST Act 2017 - the supply of electricity as goods and/or distribution of electricity as service are covered under exemption either in terms of entry No. 104 of Notification No.02/2017 CT(R) dated 28.06.2017 applicable to goods and /or entry No.25 of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 applicable to services.
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