The Patna High Court while disposing of the writ petition held that the issue whether exemption granted to transmission/distribution of electricity would take in ancillary services offered to its consumers is pending consideration before the Supreme Court.
The bench of Chief Justice K. Vinod Chandran and Justice Partha Sarthy has observed that the penalty proceedings will stand stayed till the final decision of the Supreme Court in the matter of exemption regarding ancillary services, and if the issue is held against the assessee, then necessarily penalty will have to be independently considered, on the basis of principles governing imposition of penalties.
The petitioner/assessee is engaged in the activities/services which are culled out for the purpose of levy of tax under the CGST Act by a classification namely application fee for releasing connection of electricity; rental charges against metering equipment; testing fee for meters/ transformers, capacitors etc.; labour charges from customers for shifting of meters or shifting of service lines; and charges for duplicate bill.
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The two assessees who are electricity distribution companies relied on Sections 7 and 8 of the CGST Act, 2017 and contend that it is a composite service offered to the consumers, and there cannot be any clarification by which the exemption granted by a notification is diluted.
The assessee submitted that they have paid up the entire liability of the years, which are the subject matter of the two instant cases. They are continuing to pay the liability under protest, subject to the final decision in the writ petition. The petitioner-Companies would go on paying the levy which shall be treated as payments made under protest, subject to the final judgement of the Supreme Court in C.A. No. 006278 of 2019.
The assessee submits that penalty proceedings were issued, which were stayed only on the ground of the pendency of the writ petitions. The order in the penalty proceedings specified that there shall be a stay till the disposal of the writ petition. The penalty proceedings shall not be continued and proceeded with till the Hon’ble Supreme Court passes final judgement in the matter.
The court held that the writ petitions stand closed leaving the parties to abide by the Supreme Court judgement and status quo be maintained with respect to the payments and also the penalty proceedings till judgement is delivered by the Hon’ble Supreme Court in C.A. No. C.A. No. 006278 of 2019.
Case Details
Case Title: South Bihar Power Distribution Company Ltd. Versus UOI
Citation: Civil Writ Jurisdiction Case No.24457 of 2019
Decision Date: 01-08-2024
