Shifting/Raising Height of Transmission Towers/Lines through Contractor attracts 18% GST: AAR [Read Order]

The MaharashtraAuthority for Advance Ruling (AAR) recently held that the activity of shifting or raising the height of transmission towers or lines carried out through a contractor, for a dedicated consumer like the National Highways Authority of India or Indian Railways amounts to a taxable supply under Goods and Services Tax (GST) regime and attracts tax at the rate of 18%.

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The query was answered against an application filed by Maharashtra State Electricity Transmission Company Limited (MSETCL), a wholly owned Maharashtra Government enterprise and the state transmission utility. MSETCL sought clarity on the taxability of various works undertaken by it on behalf of dedicated consumers, including the shifting or height-raising of existing transmission infrastructure.

The concerned works are funded through advance adjustable deposits and supervision charges paid by the consumer.

The applicant, represented by Arpit Jain submitted that the shifting or raising of height of existing towers/lines becomes necessary due to development activities like road widening or rail infrastructure expansion by various public sector entities. The cost of such modification is paid by these entities and MSETCL executes the project through third-party contractors.

Upon completion, the asset is capitalised in MSETCL’s books at a nominal value of ₹1, without transferring ownership.

Sudarshana J. Patil appeared for the Revenue.

The Bench of D.P. Gojamgunde, Joint Commissioner of State Tax, and Priya Jadhav, Joint Commissioner of Central Tax observed that the activity in question is not covered under the exemption for transmission and distribution of electricity under Entry 25 or the ancillary services under Entry 25A of Notification No. 12/2017.

The authority further noted that the service is not rendered to consumers of electricity and does not involve any activity of power transmission per se. Rather, it amounts to a contractual service provided to entities seeking relocation of transmission assets for their project needs.

Relying on Circular No. 178/10/2022-GST dated 03.08.2022, the Authority classified the activity as one of "agreeing to do an act" under SAC 999792 and thus attracting 18% GST. The Authority further observed that input tax credit (ITC) eligibility would depend on whether the resultant asset qualifies as plant and machinery under Section 17 of the CGST Act.

Furthermore, the time of supply would be governed by Section 13 of the Act, and the value of supply would be determined under Section 15.

Accordingly, the AAR ruled that MSETCL's activity of shifting or height-raising of transmission lines/towers through a contractor for dedicated users constitutes a taxable service under GST at 18%.

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