Page 168 - GSTL_14th May 2020_Vol 36_Part 2

270 GST LAW TIMES [ Vol. 36
(vii) Where the Applicant gets the construction/erection carried out by
EPC Contractors, the EPC Contractors pay GST and the cost of con-
struction/erection is recovered by the Applicant from the consum-
ers. Hereto annexed as Exhibit “A” by way of example is an Invoice
raised by EPC Contractor on the Applicant which shows charging
of GST.
(viii) For recovering the cost of construction from the consumers, the Ap-
plicant provides to the consumer, an Estimate of the cost of materi-
al, labour, contingency charges and supervision charges (15% of
cost of materials and labour) in terms of GERC Regulations. The
Consumer then makes a Deposit of the Estimate with the Applicant.
After the completion of the construction/erection work, the Deposit
is adjusted against the actual cost of labour and material and super-
vision charge at 15% of such actual cost.
(ix) Since as stated above, though the cost of construction/erection is
borne by and recovered from the consumer, the Bays/Sub-stations,
Overhead Lines, etc., so constructed/erected vest in the Applicant
and are the property/assets of the Applicant. There is no question
therefore of the Applicant having rendered any construction service
to the consumers. What is constructed by the EPC contractors be-
comes the property of the Applicant and not of the consumer and
hence there is no question of the Applicant having rendered any
construction service to the consumer.
(x) In terms of Section 15(1) of the Central Goods and Services Tax Act,
2017, the value of supply of a service shall be the transaction value,
which is the price actually paid or payable for the supply of service
when the supplier and recipient are not related and price is the sole
consideration for the supply. Further, Section 15(2)(b) of the said
Act provides that the value of supply shall include any amount that
the supplier is liable to pay in relation to such supply but which has
been incurred by the recipient of the supply and is not included in the
price actually paid or payable for the supply of the service. Further,
Section 15(2)(c) provides that the value of supply shall include any
incidental expenses charged by the supplier to the recipient of a supply and
any amount charged for anything done by the supplier in respect of
the supply of services at the time of, or before supply of services.
Thus, the cost of aforesaid construction/erection and other charges
including Pro rata charges, supervision charges, proportionate line
charges, registration fees and operation and maintenance charges
which are incurred by the recipient of the supply of service of
Transmission of Electricity (consumer) and which are charged by
the Applicant from the consumer will form part of the value of sup-
ply of service of Transmission of Electricity.
(xi) The service of “Transmission of Electricity” by a State Transmission
Utility is exempt from GST, by Sr. No. 25 of Notification No.
12/2017-Central Tax (Rate), dated 28-6-2017 and Sr. No. 25 of Noti-
fication No. 12/2017-State Tax (Rate), dated 30th June, 2017. Thus
the entire value of the supply of service of “Transmission of Elec-
tricity” by the Applicant which as submitted in para 3 above will in-
clude the aforesaid cost of construction/erection in addition to the
GST LAW TIMES  14th May 2020  168