GST not Leviable on Statutory Fee Collected by Electricity Regulatory Commission: P&H HC Quashes SCN [Read Order]

The Punjab & Haryana High Court has held that GST ( Goods and Services Tax ) cannot be levied on statutory fees such as petition fee, ARR processing fee and licence fee collected by the Commission while discharging its functions under the Electricity Act, 2003.

The petition was filed by Punjab State Electricity Regulatory Commission challenging the SCN issued by the GST department.

In this case, the Division Bench of Justice Lisa Gill and Justice Ramesh Chander Dimri held that such fees are received in the course of judicial/quasi-judicial and statutory regulatory functions, and cannot be treated as “consideration” for supply of services under GST Act.

The fact is that the GST authorities issued a notice levying GST on amounts collected by PSERC as petition fee, ARR processing fee and licence fee.

The Commission argued that these amounts are collected strictly under statutory mandate while performing functions under Section 86 of the Electricity Act, 2003, and therefore do not constitute any taxable supply.

It was further submitted that the issue was squarely covered by the Delhi High Court decision in Central Electricity Regulatory Commission v. Additional Director, DGGI, where a similar GST demand on regulatory fees was struck down.

The High Court noted that the Delhi High Court, after examining Section 7 of the CGST Act and the definitions of “business” (Section 2(17)) and “consideration” (Section 2(31)), had held that regulatory functions such as tariff regulation, inter-State transmission regulation and issuance of licences cannot be treated as activities in furtherance of business under GST.

The Delhi High Court stated that “even though Section 2(102) of the CGST Act defines the expression "services" to mean "anything other than goods", the expansive reach of that definition would have to necessarily be read alongside Schedule III and which excludes services per se rendered by a court or tribunal established under any law. The provision made in Schedule III is clearly intended to insulate and exempt the functions discharged by a court or tribunal from the levy of a tax under the CGST.

The Punjab & Haryana High Court also noted that the Department’s SLP against the Delhi High Court judgment had been dismissed by the Supreme Court on 21.07.2025. Therefore the legal stand taken by the Delhi High Court is binding.

Accordingly, the high court set aside the notice issued to the commission.

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