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Electricity

Shivam Chomal (498 Points)

13 June 2017

Can anyone highlight the relevant section from the Acts of GST stating electricity will be out of ambit of GST??

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17 Replies

Hasmukh Kothari (36 Points)
Replied 13 June 2017

it is considered as supply therefore it is not outside the ambit of GST

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Shivam Chomal (498 Points)
Replied 13 June 2017

And which section says that?

Hasmukh Kothari (36 Points)
Replied 13 June 2017

section 7 that is scope of supply

Shivam Chomal (498 Points)
Replied 13 June 2017

electricity hasn't been included anywhere within the scope of GST, sec 7 is just the charging section for general supplies,so if you have anything to say specifically on electricity it'll be be good and not on the general provisions.

Preeti (Team_GSTSoln) (Team GST Experts) (1926 Points)
Replied 13 June 2017

check gst exemption list for your query https://www.gstsoln.com/latest-gst-list-exempted-goods-services/

point 6 is relevant

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Hasmukh Kothari (CA) (519 Points)
Replied 13 June 2017

If you have read definition properly then it falls under definition of supply no specific provision is required

Shivam Chomal (498 Points)
Replied 13 June 2017

@ preeti mam, if i am selling electricity based on agreement with parties and charging from them as per rate determined in the agreement,then what will be the case? for instance "if i give XYZ contractors a works contract and in the contract we have decided that that i will provide electricity to XYZ contracts which it will require in performing the contract. Also i will charge XYZ contractors for electricity at rate determined under contract" . Now here please explain taxability of electricity. I am not electricity transmission or distribution utility here.

Preeti (Team_GSTSoln) (Team GST Experts) (1926 Points)
Replied 13 June 2017

shivam if u r non govt entity , then charge gst

Shivam Chomal (498 Points)
Replied 13 June 2017

@ preeti mam, ok,thank you mam, will the rate of 18% be applicable here?

Shivam Chomal (498 Points)
Replied 13 June 2017

@ hasmukh kothari, sir ,this doubt is little more than that(Sec 7)..please have a reading of this link's article and furthur add your opinion.

https://www.linkedin.com/pulse/article-287-288-constitution-india-provides-exemption-gajanan-khare

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Hasmukh Kothari (36 Points)
Replied 13 June 2017

ok sir thank you

Preeti (Team_GSTSoln) (Team GST Experts) (1926 Points)
Replied 13 June 2017

link not working shivam

Shivam Chomal (498 Points)
Replied 13 June 2017

oh! Sorry mam, i am quoting the part of it herein below: please have a look and share your views please.

"Article 287 and Article 288 of the Constitution of India provides for exemption from taxes on electricity which is consumed by Government of India or consumed for specified purpose. Entry 53 of List II (State List) of Schedule VII to the Constitution deals with ‘taxes on sale or consumption of electricity’; and this Entry is not being touched / amended by the GST Constitution Amendment Bill. No alteration to Entry 53 appears to be an assumption for not considering / envisaging electricity in the GST regime.

. The power to levy taxes on consumption or sale of electricity has been provided to the State Government vide entry 53 of List II of Seventh Schedule of Constitution. However, such entry is not being subsumed and accordingly taxes on consumption or sale of electricity have been proposed to be kept outside GST. Therefore, the electricity generated by renewable sources would continue to be outside the GST regime and the State Government would have the power to continue to tax the same. Currently, tax on electricity is levied only under Entry 53 and it’s specifically exempted/ excluded from levy under Entry 54.

Electrical Equipments are proposed to be taxed at 18 percent in GST Regime as against around 28 percent in the current scenario. The sector has to examine the impact of such goods on their generation plants."

Shivam Chomal (498 Points)
Replied 13 June 2017

It says futhur "Entry 54 which empowers the States to levy tax on sale of goods has been subsumed as part of GST. The term ‘goods’ has been defined in the Constitution as ‘goods include all materials, commodities, and articles’. Given the wide definition of the term ‘goods’, it may be argued that electricity qualifies as ‘good’. This is also supported by judicial precedents and the fact that in various State VAT laws, electricity has been included in the category of ‘exempted goods’. Also, electricity has been mentioned in the Excise Tariff. In light of the discussions, it is possible to consider electricity as goods and accordingly, technically possible to tax electricity under GST (as sale of goods). Currently, tax on electricity is levied only under Entry 53 and it’s specifically exempted/ excluded from levy under Entry 54. It may assumed that the same dispensation would continue (i.e., States would continue to tax electricity as presently under Entry 53 as this Entry has not been subsumed in GST) and that there would be no levy under GST on output electricity although Entry 54 has been subsumed in GST."