TMI Blog2021 (1) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruling, Uttar Pradesh, is deemed to be not in operation. - UP/AAAR/13/2021 - - - Dated:- 21-1-2021 - SHRI AJAY DIXIT, AND SMT. AMRITA SONI, MEMBER, (Proceedings under Section 101 of the Central Goods and Service Tax Act, 2017 and Uttar Pradesh Goods and Service Tax Act, 2017) The present appeal has been filed under Section 100 of the Central Goods and Service Tax Act and Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as the CGST Act and UPGST Act ) by M/s. Uttar Pradesh Power Corporation Ltd, Shakti Bhawan, 14, Ashok Marg, Lucknow, Uttar Pradesh (hereinafter referred to as the Appellant ) against the Advance Ruling Order No. UP ADRG-64/2020 dated 17.09.2020 issued by the Authority for Advance Ruling, Uttar Pradesh. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean a reference to the same provisions under the UPGST Act, 2017. Brief Facts of the Case 1) M/s Uttar Pradesh Power Corporation Limited, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither they being exempt or non-taxable will also be liable to GST; IV) Whether transfer of miscellaneous incomes of the applicant Corporation to DISCOMs, UPPTCL and other power companies will attract GST; V) If the answer to I or II is in affirmative, whether GST paid on all taxable expenditure will be allowed as ITC to the corporation for further adjustment of GST payable on recovery of expenses by way of book entries. 5) The Authority for Advance Ruling, vide Order No. UP ADRG-64/2020 dated 17.09.2020 ruled that: I. The Applicant is liable to pay GST on the O M Expenses charged from its subsidiary companies. II. As the supplies have been held as taxable as per 1 above, the question no. 2 becomes infructuous. III. With regards to specific heads as mentioned in the question no. 3, the GST would be chargeable. IV. Income shared with the subsidiaries by the Applicant would also be chargeable to GST. V. While ITC may be availed, in principle, but the admissibility of the same would depend upon the provisions of Section 16 17 of the CGST Act read with Rule 36 of the CGST Rules. 6) Being aggrieved with the Order No. UP ADRG-64/2020 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of consideration for the said supply. The Appellant has also placed reliance on decision of Hon ble Gujarat High Court in Torrent Power Limited vs. Union of India , to muster their claim. 7.7) In order to establish taxability of any amount under GST, there should be a nexus between the amount received and the performance of any activity for the recipient of such supply. In the present case, there is no specific activity agreed between the Appellant and the other parties in return of such expenses. Further, the activities, in relation to which such expenses are incurred and later recovered, are undertaken by the Appellant for its own, in furtherance of the supply of electricity by it. 7.8) The main work of the Appellant is to supply electricity to DISCOMs and undertake administrative work in this behalf. Further, the Appellant is the holding company of these DISCOMs and other related companies. In order to fall within the ambit of supply under CGST Act, there must be an activity conducted for another for a consideration and it must be in the course or furtherance of business. The apportionment of expenses in ratio to the power allocated to DISCOMs is a mere adjustment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avail ITC. 10) The views of the Member (CGST) are as under:- 10.1) As regard to the contention of the Appellant that the amount under consideration charged by the Appellant from DISCOMs is consideration for supply of electricity, which is exempt from payment of GST and there is no supply of service by the Appellant in recovery of such expenses by way of book entries, I observe that the scope of supply has been defined in Section 7(1) of the CGST Act, 2017 and the basic ingredients of the supply are (i) that it is made or agreed to be made for a consideration and (ii) it is done in the course of furtherance of business. Further as per clause (a) of subsection 31 of Section 2 of the CGST, Act 2017, any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government . 10.2) I also observe that the Appellant and the DISCOMs are registered as separate business entities. Apart from the supply of electricity, the other activities being carried out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning institute expenses, 0 M expenses etc. are not continuous supplies. Supply of electricity can also be made without provisions of these services. Therefore, I am of the opinion that these services, referred above by the Appellant, are not naturally bundled with the supply of electricity. 10.4) I also observe that for a supply to be considered as a composite supply, its constituent supplies should be so integrated with each other that one cannot be supplied in the ordinary course of business without or independent of the other. In other words they are naturally bundled. The concept of the Naturally Bundled , used in Section 2 (30) of the CGST Act 2017, lays emphasis on the fact that the different element in a composite supply are integral to the overall supply and if one of the element is removed the nature of supply will be affected. However in the case of Appellant the provision of supply of electricity can be made even in the absence of other services. In view of this, I am of the opinion that both the services are not Naturally Bundled . 10.5) The appellant has relied upon the Judgment of Hon ble Gujrat High Court in the case of M/s. Torrent Power Limited , howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Further Section 2(90) of CGST Act defines principal supply as:- Principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. 11.4) In view of above, I observe that it is the supply of electricity, which provides the essential character to the entire transaction. The intention of the DISCOMs is to receive supply of electricity. If electricity is not supplied, the subject services will not be supplied at all. Accordingly, it is the supply of electricity which will constitute predominant element of the composite supply and accordingly, will be the principal supply in terms of Section 2(90) of the CGST Act. I further observe that in terms of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 supply of electrical energy is exempt from p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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