In Order No. AAR/GST/PB/33 -AAR- Shifting of transmission lines by Punjab State Transmission Corporation Limited on NHAI's request attracts 18% GST: AAR (Punjab)
Members Varinder Kaur (Central Tax) & Viraj Shyamkarn Tidke (State Tax) [30-05-2023]

Read Order: In Re: Punjab State Transmission Corporation Limited

Chahat Varma

New Delhi, July 27, 2023: The Punjab bench of the Authority for Advance Rulings has ruled that the services provided by Punjab State Transmission Corporation Limited (PSTCL) for shifting of transmission lines on the request of the National Highways Authority of India (NHAI) will be classified under Service Head 998631 and will attract GST at a rate of 18%.

The applicant, PSTCL, was primarily engaged in the business of transmission of electricity, which was exempt under Goods and Services Tax Act. They sought an advance ruling to determine the applicable GST provisions and rate on shifting of transmission lines requested by NHAI for widening roads. They also wanted clarification on whether GST should be charged on material, labour, and supervision charges or only supervision charges.

The bench of Varinder Kaur (Central Tax) and Viraj Shyamkarn Tidke (State Tax) observed that while the applicant's main business was electricity transmission, the contribution work or deposit work they undertook were ancillary services to their primary activities. These ancillary supplies were provided on specific requests and were not part of the regular course of business. Additionally, they were charged separately and not bundled with the principal supply of electricity transmission. Thus, the bench held that the services provided by applicant for 'Contribution Work' fell under HSN/SAC 998631, attracting GST at 18%.

Regarding the transaction value, the bench clarified that even though NHAI bore the entire cost of material, labour, and supervision charges incurred by the applicant for the shifting work, the ownership of the transmission system remained with the applicant. As per Section 15(2)(b) of the CGST Act, the cost of such assets incurred by the third party (NHAI, in this case) should have been included in the value of supply for GST levy. Therefore, it was held that the transaction value was to be considered as the price actually paid or payable, and GST would be leviable on the total transaction value.