Page 29 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] ELECTRICITY SUPPLIED AS PER LEASE AGREEMENT — LEVY OF GST J125
the ground that electricity generated through DG sets is service unlike the elec-
tricity received through grid which is held to be goods.
The Authority also held that the consideration received for electricity
supplied through DG sets forms part of ‘utility services’ taxable at 18% whereas
the supply of electricity by way of grid is exempt from GST.
With due respect, it is submitted that the above said ruling appears to
contain the following anomalies as regards interpretation of GST law.
(a) The Authority appears to have assumed that the underlying supply
in supply of electricity through DG sets is a leasing transaction,
which is service, and therefore, exemption for goods transaction is
not applicable. However, the Authority has not further dwelled up-
on to see whether there is any notification to say that irrespective of
nature of classification viz. either as goods or services, the tax liabil-
ity in the hands of assessee remains the same when the purpose
achieved in either mode is one and the same.
In this regard, one can place reliance on rate notification for service
to say that in a leasing transaction, the rate of tax applicable for
goods, which is subjected to leasing, is equally applicable on leasing
transaction of those goods. Extract of Notification No. 11/2017-C.T.
(Rate), dated 28th June, 2017, under S. No. 17 clause (iii) given be-
low which provides for tax rate applicable for goods is equally ap-
plicable for leasing out of such goods. Hence, when electricity per se
is exempted under goods notification, leasing it out as a service is
also exempted under clause (iii) in S. No. 17 in Notification No.
11/2017-C.T. (Rate), dated 28th June, 2017.

17 Heading (i) Temporary or permanent 6 -
9973 transfer or permitting the use
(Leasing or enjoyment of Intellectual
or rental Property (IP) right in respect
services, of goods other than Infor-
with or mation Technology software.
without (ii) Temporary or perma- 9 -
operator) nent transfer or permitting
the use or enjoyment of Intel-
lectual Property (IP) right in
respect of Information Tech-
nology software.
[Please refer to Explanation
No. (v)]
(iii) Transfer of the right to Same rate of -
use any goods for any pur- central tax as
pose (whether or not for a on supply of
specified period) for cash, like goods in-
deferred payment or other volving trans-
valuable consideration. fer of title in
goods

[Continued on page J129]

GST LAW TIMES  26th March 2020  125