18% applicable on GST on Depository Contribution Works: AAR [Read Order]

The Tamil Nadu Authority of Advance Ruling (AAR) ruled that Depository Contribution Works is classifiable under SAC 99873 and the applicable rate of tax is 9% of CGST and 9% as SGST is applicable.

The applicant, M/s Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) is a subsidiary of Tamil Nadu Electricity Board Limited (TNEB). TANGEDCO Ltd. & TANTRANSCO LTD. are two subsidiary companies of TNEB Ltd. (Holding company), and both are registered utilities for distribution and Transmission of Electricity respectively under the Electricity Act, 2003.

TANGEDCO and TANTRANSCO enter into transactions between them in the course of a generation, transmission, and distribution of electricity in Tamil Nadu.

The applicant sought advance ruling on the issue of applicability of GST on the transactions between TANGEDCO Ltd. & TANTRANSCO Ltd.

The Authority consists of members Manasa Gangotri Kata and Thiru Kurinji Selvan V.S., while saying TANGEDCO is a ‘Government Entity, ruled that GST is applicable on the supply of operation and maintenance materials used in the regular day to day functioning; and transfer of capital assets. Also, GST is applicable to the deployment of employees to TANTRANSCO as the same is the supply of Service.

However, the Authority ruled that GST is not applicable on the transactions of physical fund flow between the companies by the way of repayment of the existing loan, availing of fresh loans, etc. on actual basis without any interest component on such fund flow and income such as transmission charges, Scheduling, and Systems Operating charges, Reactive Energy Charges, etc. received from open access consumers by the applicant and adjusted through payable to TANTRANSCO as both are transaction in money.

“Depository Contribution Works is classifiable under SAC 99873 and the applicable rate of tax is CGST @ 9% as per SI.No. 25 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST @ 9% as per SI.No. 25 of Notification No. II (2)/ CTR/ 532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended and the same is not exempted,” the AAR clarified.

To Read the full text of the Order CLICK HERE