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TMI Blog2023 (7) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 2/2017-Central Tax (Rate), dated 28-06-2017 and also transmission and distribution of electricity is exempt as per serial number 25 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017. 2.1 The Applicant further stated that they are going to set up various public charging stations (PCS) on its own, for charging electric vehicles (EVs), both two-wheelers and four-wheelers. The charging of a battery in EVs requires electricity. The Applicant will provide electric energy to these public charging stations. All electric vehicle users can access these pubic charging stations for battery charging. The Applicant would like to issue tax invoices and collects "Electric Vehicle Charging Fee". It includes two components - (a) 'Energy Charges', and (b) 'Service Charges'. 'Energy Charge' refers to the number of units of energy consumed and the 'Service Charge' refers to the services provided by the charging station, i.e. the cost of setting up the service station and running the same. 2.2 Further, the applicant also stated that the Ministry of Power, in its guidelines dated 13-04-2018, has laid down various requirements which a person would be required to comply in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts to or results in a supply of goods or service or both, within the meaning of that term", which are covered under Sections 97(2) (a), (b), (d),(e) and (g) respectively of the CGST Act 2017 and hence the instant application is admissible. 5. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue: 5.1 The applicant is a limited company, engaged in distribution of electricity and sale of energy; they purchase power from central and state generating stations, major independent power producers and independent power producers from non-conventional sources like wind, solar and mini hydel, Telangana State Power Generation Corporation Ltd., Damodar Valley Corporation Ltd. and short-term and medium-term co-generators; they supply and distribute power to various consumers, such as, companies, industries, commercial shops, hospitals, farmers, irrigation pumps, individuals, Government organizations etc. in the districts of Mysore, Mandya, Chamarajanagar, Hassan and Kodagu. The retail tariff is determined by the Karnataka Electricity Regulatory Commission (KERC) as per Electricity Act 2003. 5.2 The supplies of energy and services of transmission a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes the public charging stations set up by the Corporation. It (the Ministry of Power) clarified that charging of an EV battery by a charging station involves 'a service' requiring the consumption of electricity by the charging station. The activity does not involve any sale of electricity. Relevant para of the said clarification reads as under:- "3. The charging of battery essentially involves utilization of electrical energy for its conversion to chemical energy, which gets stored in the battery. Thus, the charging of battery of an electric vehicle by a charging station involves a service requiring consumption of electricity by the charging station and earning revenue for this purpose from the owner of the vehicle. The activity does not in any way include sale of electricity to any person as the electricity is consumed within the premises owned by the charging station, which may be connected to the distribution system or otherwise for receiving electricity. By the same logic, the activity does not involve further distribution of transmission of electricity". 4. Therefore, it is clarified that during the activity of charging of battery for use in electric vehicle, the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Not known Notification No. 11/2017-Central Tax (Rate), dated 28-06-2018. The Corporation wants to know whether the service charges collected from public / consumer in public charging stations for charging electric vehicles is taxable. If so, at what rate and the SAC of the same. * Therefore, the questions arise in the context of GST are that - a) Whether charging of battery, which involves two components, is an activity of 'supply of electrical energy' (as supply of goods) and 'service charges' (as supply of service); or b) Whether the 'supply of electrical energy' and 'service charges', both components to be treated as 'supply of service' as held by the Ministry of Power, vide its Clarification dated 13-04-2018; and c) If the 'supply of electrical energy' and 'service charges' are treated as two different components, then whether the 'supply of electrical energy' is exempt as per serial number 104 of Notification No. 2/2017-Central Tax (Rate), dated 28-06-2017 (HSN 2716 00 00) and 'service charges' is taxable as per Notification No. 11/2017-Central Tax (Rate), dated 28-06-2017; d) If the entire transaction is treated as 'supply of service', then the SAC and the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with HSN 2716 00 00 and covered under SI. No. 104 of exemption Notification No. 2/2017-Central Tax (Rate), dated 28-06-2017, the question before us is whether electric vehicle charging amounts to supply of electricity or not. The activity of electric vehicle charging involves charging of a battery i.e, conversion of electric energy to chemical energy in the premises of the applicant's Public Charging Stations (PCS). Electricity which is a 'moveable' property and classified as goods, is not supplied as such to the consumer, rather it is converted into chemical energy. Recipient or the consumer does not receive electricity as such as in the case with any other supply of goods or moveable property. Consumer receives only chemical energy stored in the battery. It is a case of putting to use electrical energy at the PCS for its conversion into chemical energy. The applicant also measures the 'Energy Charges' in the number of units of energy consumed for undertaking the said activity of charging of battery and not the amount of electricity transmitted to the consumer for his further application or usage. Thus we find that the activity of charging of electric vehicle does not amount to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 14, or is exempt under section 13. From the above it is seen that "supply", in relation to electricity, to mean the sale of electricity to a licensee or consumer and Section 2(15) of the said Act defines "consumer" to mean any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be. From the said provisions, it can be inferred that it is mandatory to have a licence to supply electricity and the premises of consumer including land, building or structure to be connected for the purpose of receiving electricity. In the instant case, it is admitted that the Public Charging Stations (PCS) proposed by the applicant do not have licence as required under the Act, 2003 and the consumer lacks any premises for transmission through a service line or otherwise. The consumer is also not supplied with electricity, rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... require licence under the provisions of the Electricity Act 2003 and hence the charging of batteries of electric vehicles through charging station does not require licence under the provisions of the Electricity Act 2003. 14. In view of the above, the charging stations do not require a licence for charging the battery of an EV and thus the said stations are not involved in transmission, distribution or trading of electricity. Therefore, even on this count also the impugned activity amounts to supply of service. 15. In view of the above, as the activity of charging battery of electrical vehicle is considered as supply of service, the applicability of Notifications 2/2017-Central Tax (Rate) and 12/2017-Central Tax (Rate) both dated 28.06.2017 does not arise to the instant case. 16. Now we proceed to determine the classification of the impugned activity of the applicant i.e. charging battery of Electrical Vehicle as it is already decided in the previous paras that it amounts to supply of service. It is observed from the Explanatory Notes to the Scheme of Classification of Services, which is adopted for the purposes of GST, that SAC 9987 covers Maintenance, repair and installation ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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