UP AAR: GST Will Be Levied on the Installation of Electricity Distribution Systems by DISCOMs

Goods and Services Tax (GST) is to get paid on the procurement of materials and installation of electricity distribution systems when accomplished via an electricity distribution company (DISCOM) under the works contract between the DISCOM and consumers/intending agencies, Uttar Pradesh Authority for Advance Ruling (AAR) ruled.

Pashchimanchal Vidyut Vitran Nigam Limited, a subsidiary company of the state-owned Public Sector Undertaking Uttar Pradesh Power Corporation Ltd. based in Meerut, Uttar Pradesh has filed the Application for Advance Ruling.

The instant DISCOMs are distributors licensed via the Electricity Act, of 2003 and are in the development, maintenance, and operation of distribution systems in the State of UP. Additionally, the DISCOMs also perform the ‘deposit works’ including assisting in the development of electricity infrastructure as sought by consumers or intending agencies, following the provisions of Section 40 of the Electricity Act, 2003 and Clause 4 of the Electricity Supply Code, 2005.

Also Read: What If Electricity Comes Under GST India?

The existing application, among other problems, queries the GST subject to get paid on the method of Deposit Work in which the whole material along with the installation is been arranged and supervised via the applicant on the consumers/ intending agencies’ behalf. Also, DISCOM inquired about their eligibility to take the Input tax credit of GST on material, labour, installation, and other overheads.

The two-member Bench of the Uttar Pradesh Authority for Advance Ruling including Amit Kumar, Central Tax Member, and Harilal Prajapati, State Tax Member noted that in the present method of proposed deposit work, the work accomplished via the Applicant is a “Works Contract” as per Section 2(119) of the Central Goods and Services Tax Act, 2017 (CGST Act).

Also, AAR mentioned that as the structure ownership is awarded to the petitioner and is utilised in the operation of the business of the petitioner, therefore it will be qualified to take the ITC on the material labour, installation, and other overheads accrued in the procedure of establishment of the structure.

Under the Findings, AAR carried that the GST liable to get paid would be decided on the value of material and cost of execution work reimbursed on a cost basis via the Consumer to the petitioner.

AAR carried that the petitioner is qualified to take the input tax credit of GST on material, labour, installation, and other overheads as per the said prerequisites of Section 17(5)(c) and (d) of the CGST Act, 2017, and related rules.

Name of Applicant	M/s Pashchimanchal Vidyut Vitran Nigam Limited
GSTIN	09AAECP5610N1Z4
Date	01.08.2024
Represented By	Mr Dishant Lodhi
UP GST AAR	Read Order