TORRENT POWER LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of India, the petitioners seek the following substantive reliefs:-

(2.) The facts giving rise to the present petition are that the petitioner No.1 is a public limited company (hereinafter referred to as "the petitioner company") and the petitioner No. 2 is the executive director and authorized signatory of the first petitioner. The petitioner company is, inter alia, engaged in the business of generation, transmission and distribution of electricity in the State of Gujarat and is duly registered under the Goods and Service Tax Acts. The petitioner company has distribution licence in the cities of Ahmedabad, Surat, Gandhinagar and the Dahej SEZ. It also has a distribution franchisee for Bhivandi in the State of Maharashtra and for Agra in the State of Uttar Pradesh.

(3.) Mr. S. N. Soparkar, Senior Advocate, learned counsel with Mr. Uchit Sheth, learned advocate for the petitioners, submitted that the impugned circular issued by the Government of India clarifying that the charges recovered for the activities directly connected with the distribution and transmission of electricity such as application fee, meter rent, testing fee, labour charges for shifting meters and shifting of service line, etc. (hereinafter referred to as "related services") are taxable and not covered by the exemption notification, is contrary to the express words as well as intent of the entry providing for exemption under the GST Acts as well as contrary to the statutory provisions of the GST Acts and the rules framed thereunder. It was submitted that entry 25 of the exemption notification exempts from tax, the service of transmission or distribution of electricity. Such notification would cover all activities that are directly and closely connected to the distribution or transmission of electricity. It was pointed out that, in fact, the charges such as meter rent and other similar charges are specifically included in the charges for electricity as per the provisions of the Electricity Act, and that even other miscellaneous charges relating to the activity of transmission or distribution are required to be collected by the petitioners in accordance with the provisions of the Electricity Act and the GERC Regulations. Such activities are mandatorily required to be carried out by the petitioners for the purpose of supply and distribution of electricity and, in fact, it is not even possible to supply electricity without undertaking such activities. It was contended that, all charges, such as application fee, meter rent, testing fee etc. are towards the service of transmission and distribution of electricity and, therefore, the clarification to the effect that they would not be covered by entry relating to exemption of transmission or distribution of electricity is contrary to express words as well as intent of the exemption notification and, therefore, bad and illegal.