Rejected Paddy used for Animal Feed, Cattle Feed etc. classified under HSN Code 1006 10 90: AAAR In Re: M/SDongarmal Jain CITATION: 2025 TAXSCAN (AAAR) 101

The Appellate Authority for Advance Ruling ( AAAR ), Chhattisgarh recently affirmed that rejected paddy used for animal feed, cattle feed, poultry feed, manure and industrial use are to be classified under Harmonized System of Nomenclature ( HSN ) Code 1006 10 90.

The two-member Bench of Chandra Prakash Goyal and Rajat Bansal disagreed with the ruling of the AAR in classifying rejected paddy under HSN 1006 10 (Rice in the husk) as rejected paddy is completely unfit for human consumption and would warrant a separate classification. The Bench further clarified that rejected paddy shall be rightly placed under HSN 1006 10 90 but refrained from commenting on its taxability owing to lack of further details regarding the proposed industrial usage of the rejected paddy seed.

Sale of used Lead Acid Batteries, Plastic Waste and Metal Scrap not Bound by Margin Scheme u/r 32(5) CGST Rules: AAAR In Re: M/s.Hitesh Gwalani CITATION: 2025 TAXSCAN (AAAR) 102

The Rajasthan Appellate Authority for Advance Ruling ( AAAR ) has clarified that the Margin Scheme as envisioned under Rule 35(5) of the Central Goods and Services Tax ( CGST ) Rules, 2017 shall be applicable on the sale of used lead acid batteries, plastic waste and scrap from aluminium, steel, copper and brass utensils.

The two-member Bench of Mahendra Ranga, Member (Central Tax) and Ravi Kumar Surpur, Member (State Tax) observed that the Appellant’s claim of second-hand goods owing to purchase from unregistered suppliers and subsequent sale without any process is not tenable. Citing an example of a used car, the Bench held that ‘a second hand car shall be used in the same way as a new car. Thus mere change of ownership is not sufficient to term them as second hand goods under the purview of Rule 32(5) of the CGST Rules, 2017’.

No GST Exemption on ‘Abhivahan Permission Shulk’ paid to Forest Department for Clearance of Mined Coal: AAAR In Re: M/s.Chhattisgarh State Power Generation Co.Ltd CITATION: 2025 TAXSCAN (AAAR) 103

The Chhattisgarh Appellate Authority for Advance Ruling ( AAAR ) in a blow to the Chhattisgarh State Power General Co. Ltd. ( CSPGCL ) ruled that no Goods and Services Tax ( GST ) exemption may be provided on ‘Abhivahan Permission Shulk’ paid by them to the Forest Department for the issuance of transit pass of mined coal.

The two-member Bench of Chandra Prakash Goyal and Rajat Bansal observed that the permit charges collected by the forest department is used by them to oversee the mining activity and not related to any of the tenets of urban forestry and protection of the environment under Articles 243G and 243W of the Constitution of India. Matters being so, the same were deemed not eligible for NIL rate of GST, as provided under Sl. No. 4 and 5 of Notification No.12/2017-Central Tax (Rate).

Demo Motor Vehicles not eligible for GST ITC on Inward Supply: AAAR Shuns Maruti, Bajaj, KTM & Chetak Dealership In Re: M/s SaiService Private Limited CITATION: 2025 TAXSCAN (AAAR) 104

The Appellate Authority for Advance Ruling ( AAAR ), Goa recently dispelled the claim of Input Tax Credit ( ITC ) on motor vehicles maintained exclusively for demonstration purposes by vehicle dealerships.

The two-member Bench of Sarpreet Singh Gill, Commissioner of State Tax and Mayank Kumar, Chief Commissioner Central Tax and Customs observed that demo motor vehicles are supplied at a discounted rate and are categorized separately by the Original Equipment Manufacturer (OEM). Furthermore, referring to the decision of the Haryana Appellate Authority for Advance Ruling in the case of M/s Platinum Moto Corp LLP, wherein it was held that “in the very first demonstration run, demo car loses the character of the new motor vehicle and demo vehicles is sold akin to second hand goods and which is different from new vehicle and accordingly treated differently under GST law, so the demo car is not an input”.

GST Applicable on Additional Surcharge Levied by Electricity Supplier on OA Consumer: AAAR In Re: M/s M/sChamundeswari Electricity Supply Corporation Limited CITATION: 2025 TAXSCAN (AAAR) 105

The Karnataka Appellate Authority for Advance Ruling ( AAAR ) recently affirmed the applicability of Goods and Services Tax ( GST ) on additional surcharges paid by Open Access ( OA ) Consumers towards majorly government owned electricity suppliers.

The two-member Bench of Pramod Kumar Agrawal and Shikha C observed that the additional surcharge levied under the Electricity Act from customers sourcing electricity from OA Consumers, over and above the consideration for supply and distribution of electricity is indeed taxable in terms of Section 15 of the Central Goods and Services Tax Act, 2017 ( CGST Act ), thereby subject to GST.

Suzlon’s Specially Designed Transformers for Wind Operated Electricity Generators attracts 18% GST: AAAR In Re: M/sSuzlon Energy Ltd CITATION: 2025 TAXSCAN (AAAR) 106

As per the ruling by the Gujarat Appellate Authority of Advance Ruling (AAAR), Suzlon’s specially built transformers for wind-operated electricity generators that are intended to serve as both step-down and step-up devices are subject to 18% Goods and Service Tax (GST).

The Authority of Advance Ruling (AAR) ruled that the specially designed transformers for WOG, which execute the dual function of step down and step up, supplied by the appellant-assessee are not a part of Wind Operated Electricity Generators (WOEG) and, as a result, would not be eligible for the benefit of Sr. No. 234 and Sr. No. 201A of exemption notification No. 1/2017-CT (Rate), as amended. The bench of Rajeev Topno and B V Siva Naga Kumari rejected the appeal filed by the appellant Suzlon Energy and upheld the AAR’s ruling.

No GST ITC on Services Procured by Port for Operation and Maintenance of Diving Support Vehicle: AAAR In Re: M/s M/s.Sikka Ports & Terminals Limited CITATION: 2025 TAXSCAN (AAAR) 107

The Gujarat Appellate Authority of Advance Ruling ( AAAR ) recently decided that services purchased by the port for the operation and maintenance of diving support vehicles (DSV) are not eligible for the Input Tax Credit (ITC) under the Goods and Service Tax ( GST ).

The department’s application against the Authority of Advance Ruling (AAR) ruling, which held that M/s Sikka is entitled to receive ITC on the services purchased for the operation and maintenance of DSVs: Relsagar & Reldarshan, has been granted by the two-member bench of Rajeev Topno and B V Siva Naga Kumari. For services acquired for the operation and upkeep of SPVs Eagle, Chetak, Calypso Fortune, and ML Noorani, M/s Sikka is eligible to receive ITC. Regarding the renting of a vessel [SPV], the AAAR determined that the ITC is barred under section 17(5) when the respondent’s contractor has discharged GST under SAC codes 996602 and 996609.

Herbal Cigarettes not Medicinal, 28% GST leviable: AAAR M/S AoromHerboteckh CITATION: 2025 TAXSCAN (AAAR) 108

The Gujarat Bench of the Goods and Services Tax ( GST ) Appellate Authority for Advance Ruling ( AAAR ) has upheld a ruling classifying herbal cigarettes under HSN 24029010, levying 28% GST along with compensation cess.

The authority bench of Central GST Member B V Siva Naga Kumari and State GST Member Rajeev Topno noted that, the herbal cigarettes are non-medicinal and are subject to the maximum GST rate of 28%, coupled with compensation cess. It was observed that, “What this re-confirms is what was stated during the course of personal hearing – that the appellant does not hold any license for manufacture of Ayurvedic medicine from any Regulatory Body, permitting them to manufacture the said goods, which as per their claim is a medicine.

Beef Fry, Beef Roast and other Pre-Packaged “Ready to Eat” Food attracts 18% GST: AAR M/S. HIC-ABESPECIAL FOODS PRIVATE LIMITED CITATION: 2025 TAXSCAN (AAR) 102

Kerala’s deep-rooted passion for food—exemplified by the iconic Porotta and Beef Fry combo often takes center stage in discussions about its rich culinary heritage. However, a recent ruling by the Kerala Goods and Services Tax ( GST ) Authority for Advance Rulings ( AAR ) takes the taste buds by storm.

The company argued that its offerings, made without added preservatives and packed using Japan’s RETORT technology to ensure sterility and a long shelf life, should be classified differently. But the AAR concluded that since no further cooking is required (only optional heating), these food items fall under the bracket of ready-to-eat packaged foods, taxable at 18 percent. The Authority also examined dishes such as Kerala Chicken Curry, Chicken Biryani, Mutton Curry, Beef Fry, and others, categorizing them as “ready to eat packaged food” rather than “prepared or preserved meat.” Meanwhile, items like Soya Coconut Fry, Masala Rice, Coconut Rice, Vegetable Pulao, and Tomato Rice were placed under “food preparations not elsewhere specified or included.”

AAR Rules in Favor of Hindustan Zinc: ITC not applicable to Goods or Services received for Increasing Tailing Dam Height In Re: M/sHINDUSTAN ZINC LIMITED CITATION: 2025 TAXSCAN (AAR) 103

In a ruling in case of Hindustan Zinc, the Rajasthan Authority of Advance Ruling ( AAR ) has held that Input Tax Credit ( ITC ) not applicable on goods/services received for increasing tailing-dam height. The two-member bench of Mahipal Singh and Mahesh Kumar Gowla decided that, in accordance with Section 17(5)(c) and 17(5)(d) of the Central Goods and Service Tax Act, 2017, input tax credit is not available for goods and services received for raising the height of a tailing dam used to dispose of and treat hazardous waste from mining operations.

In accordance with Sections 17(5)(c) and 17(5)(d) of the Central Goods and Service Tax Act of 2017, the applicant requested an advance ruling on whether input tax credit is available for goods and services received for raising the height of a tailing dam used to dispose of and treat hazardous waste from mining operations, known as tailings. According to the applicable laws, namely the Mines and Minerals (Development and Regulation) Act, 1957 read with the Mineral Conservation and Development Rules, 2017, the AAR determined that the tailing dam is built for the safe disposal, treatment, and management of hazardous waste from mining operations.

Thyssenkrupp’s EPC Agreement is a Composite Supply and not Divisible Contract under GST: AAR In Re: M/sThyssenkrupp Industrial Solutions (India) Private Limited, CITATION: 2025 TAXSCAN (AAR) 104

In a recent ruling, the Gujarat Authority for Advance Ruling ( AAR ) held that an Engineering, Procurement, and Construction ( EPC ) contract entered into by Thyssenkrupp Industrial Solutions (India) Private Limited (Thyssenkrupp) with the Indian Oil Corporation Limited ( IOCL ) constitutes a composite supply under the Goods and Services Tax ( GST ) regime and cannot be treated as a divisible contract.

The two-member Bench of the Gujarat Authority for Advance Ruling constituted by SGST Member Kamal Shukla and CGST Member P.B. Meena observed that the EPC Contract cannot be split into separate supplies for goods and services since EPC contracts qualify as a works contract under Section 2(119) of the CGST Act, 2017 and are inherently turnkey in nature, requiring the contractor to deliver a fully functional project. The Bench further clarified that the subject-matter contract is not a divisible contract but a single and composite contract, with the component of imported goods forming part of the transaction value for computation of value of worlds contract service.

GST Applicable on Imported Goods Sold under HSS and later used in EPC Contract, Even If IGST Paid at Import: AAR In Re: M/sThyssenkrupp Industrial Solutions (India) Private Limited, CITATION: 2025 TAXSCAN (AAR) 104

A recent ruling delivered by the Gujarat Authority for Advance Ruling ( AAR ) clarified that imported goods sold under a High Seas Sale ( HSS ) agreement and later used in a project initiated through a Engineering, Procurement, and Construction ( EPC ) contract shall attract Goods and Services Tax ( GST ), even if Integrated Goods and Services Tax ( IGST ) was already paid at the time of import of the goods.

The two-member Bench of the Gujarat Authority for Advance Ruling constituted by SGST Member Kamal Shukla and CGST Member P.B. Meena rejected the Applicant’s submissions ruling that the EPC contract is an indivisible works contract, which is taxed as a composite supply of services under GST law. The Bench further clarified that even if the imported goods were initially sold under HSS and taxed separately at customs, they go on to become part of the overall EPC contract once incorporated into the project. Therefore, the works contract shall include the entire value of the project including that of the imported goods for the purposes of calculating GST.

Leasing of E-Bikes without Operator Classifiable under Amended Tax Rate Notification at 18% GST: AAAR In Re: M/s.True Solar Private Limited CITATION: 2025 TAXSCAN (AAAR) 110

In a recent case, the Odisha State Appellate Authority for Advance Ruling ( AAAR ) for Goods and Service Tax. upheld that the leasing of E-Bikes without an operator is classifiable under the heading 9971, i.e. financial and related services under entre SL No.15 (ii) of Notification No 20/2019- CT(R) dated, 30th September 2019 and at a GST of 18%.

The AAAR observed that it is important to examine the nature of the lease agreement, whether it constituted a financial lease or an operating lease agreement. From all the submissions, it was observed that the applicant had entered into a financial lease agreement with the lessee and engaged in the supply of financial leasing services/ financial and related services. It was observed that the appropriate heading for this would be 9971.

The two-member bench consisting of Yamini Sarangi ( Member (State Tax) ) and M Sreedhar Reddy ( Member(Central Tax) ) further asserted that the leasing of electric vehicles (E-Bikes) without operator is classifiable under the heading 9971, that is, financial and services under entre SL No. 15 (ii) of Notification No. 20/2019 dated. 30th September 2019, and the tax rate will be the same as applicable on the supply of goods involving the transfer of title in goods.

GST Liability Remains even if Order is found to be Bogus: AAR In Re: AcubeEngitech Comp CITATION: 2025 TAXSCAN (AAR) 116

In a recent ruling, the Gujarat Authority for Advance Ruling (AAR) has held that the liability to pay Goods and Services Tax (GST) remains intact even if the underlying order for goods is later found to be bogus. The decision came in response to an application filed by Acube Engitech Private Limited, which had sought clarity on its GST liability in light of a cancelled purchase order allegedly issued by Indian Oil Corporation Limited (IOCL).

The AAR observed that the intention or authenticity of the recipient’s purchase order does not absolve the supplier of tax liability, especially when the supplier has undertaken the transaction in full, including the physical movement of goods and invoicing. It stated that there is no provision under the GST law that grants exemption from tax merely because the transaction was entered into under a mistaken or fraudulent representation by the recipient. The ruling was delivered by Amit Kumar Mishra, Joint Commissioner of State Tax, and Milind Kavatkar, Joint Commissioner of Central Tax, who jointly form the bench of the Gujarat AAR.

Entire Amount of Assessed Tax has to be Paid In Absence of Amnesty Schemes: Kerala HC Read More

AAAR Dismisses Mitsubishi Electric’s Appeal Due to 88-Day Delay, Cites Statutory Time Limitation In Re:Mitsubishi Electric India Private Limited CITATION: 2025 TAXSCAN (AAAR) 112

In a recent ruling, the Tamil Nadu Appellate Authority for Advance Ruling (AAAR) dismissed the appeal filed by Mitsubishi Electric India Private Limited on grounds of delay, reinforcing the strict statutory time limitations prescribed under the Central Goods and Services Tax (CGST) Act, 2017. The AAAR held that the appeal, filed after a delay of 88 days, was beyond the permissible time period and therefore could not be entertained. The Authority stated that it lacked the power to condone delays exceeding the statutory limit, regardless of the reasons provided by the appellant.

In a recent ruling, the Tamil Nadu Appellate Authority for Advance Ruling (AAAR) dismissed the appeal filed by Mitsubishi Electric India Private Limited on grounds of delay, reinforcing the strict statutory time limitations prescribed under the Central Goods and Services Tax (CGST) Act, 2017. The AAAR held that the appeal, filed after a delay of 88 days, was beyond the permissible time period and therefore could not be entertained. The Authority stated that it lacked the power to condone delays exceeding the statutory limit, regardless of the reasons provided by the appellant.

The order was passed by a two-member bench comprising Dr. D. Anand, Commissioner of Commercial Taxes, and Dr. Ram Niwas, Principal Chief Commissioner of GST & Central Excise, Tamil Nadu and Puducherry Zone, who jointly held that the delay was not condonable and accordingly dismissed the appeal.

General Motors’ Transfer of Buildings to Hyundai Treated as Service Not Sale, Attracts 18% GST: AAR Read More

AAAR upholds AAR Order: GST Advance Ruling Denied as DGGI Investigation Preceded Application In Re: TamilNadu Nurses and Midwives Council CITATION: 2025 TAXSCAN (AAAR) 113

The Tamil Nadu State Appellate Authority for Advance Ruling ( AAAR ) has upheld the decision of the Authority for Advance Ruling ( AAR ), rejecting an application filed by the Tamil Nadu Nurses and Midwives Council seeking clarity on the applicability of GST on various fees collected by them.

The AAAR ruled that since the Directorate General of GST Intelligence ( DGGI ) had already initiated an investigation into the matter before the application was filed, the advance ruling could not be admitted under the first provision to Section 98(2) of the CGST/TNGST Act, 2017.

However, the AAAR, comprising Dr. Ram Niwas, IRS, and Dr. D. Jagannathan, IAS, disagreed with the council’s interpretation. The bench emphasized that the term “proceedings” under GST law has a broader scope and includes investigations, inquiries, and other pre-adjudication processes. Referring to Section 66 of the CGST Act, the AAAR noted that the phrase “any other proceedings” is used alongside terms like scrutiny, inquiry, and investigation, indicating that these activities are also considered proceedings under the law.

AAAR Upholds AAR Order: DGGI Summons Qualify as ‘Proceedings’ under GST, Bars TN Medical Council’s Advance Ruling In Re: TamilNadu Medical Council CITATION: 2025 TAXSCAN (AAAR) 114

The Tamil Nadu Appellate Authority for Advance Ruling (AAAR) has upheld the Authority for Advance Ruling’s (AAR) decision that summons issued by the Directorate General of GST Intelligence (DGGI) constitute ‘proceedings’ under GST law, thereby barring the Tamil Nadu Medical Council (TNMC) from seeking an advance ruling on the taxability of its fees. The AAAR’s order reinforces that any ongoing investigation under GST provisions precludes applicants from obtaining advance rulings on the same matter.

The bench comprising Dr. D. Jagannathan, IAS, Commissioner of Commercial Taxes, and Dr. Ram Niwas, IRS, Principal Chief Commissioner of GST & Central Excise, concluded that allowing advance rulings during active investigations would undermine GST’s procedural integrity. The order reaffirms that taxpayers cannot seek rulings to preempt or parallel ongoing inquiries by tax authorities. This decision sets a precedent for similar cases, clarifying that the term ‘proceedings’ u/s 98(2) includes all investigative actions, not just formal adjudications.

9 Shell Firms and ₹23.66 Crore GST ITC Fraud: Faridabad Sessions Court denies Bail to Accused Read More

Panasonic Wins Partial Relief in GST Ruling: AAAR Upholds FTWZ Tax Treatment but Exempts ITC Reversal In Re:Panasonic Life Solutions India (P) Ltd. CITATION: 2025 TAXSCAN (AAAR) 115

The Tamil Nadu Appellate Authority for Advance Ruling (AAAR) has granted partial relief to Panasonic Life Solutions India Pvt. Ltd. in a significant GST case concerning supplies from Free Trade and Warehousing Zones (FTWZ). The authority upheld the tax-exempt status of such transactions under GST law while providing crucial relief by exempting the company from input tax credit (ITC) reversal requirements, except in cases involving duty-free shops.

On the critical issue of ITC reversal, the AAAR modified the AAR’s decision by limiting the requirement only to supplies made to duty-free shops at international airports. This interpretation aligns with Explanation 3 to Rule 43 of the CGST Rules, which specifically targets such transactions. For regular FTWZ operations, the AAAR ruled that no ITC reversal is necessary, providing significant compliance relief to Panasonic and similar businesses.

The bench comprising Dr. D. Jagannathan, IAS, Commissioner of Commercial Taxes, and Ashish Varma, IRS, Principal Chief Commissioner of GST & Central Excise, emphasized the need to interpret GST provisions in harmony with customs and SEZ regulations

Goods Supplied Under Fraudulent Order Without Payment: AAR Rules GST Still Applicable on Issued Invoices In Re: AcubeEngitech Company CITATION: 2025 TAXSCAN (AAR) 116

The Gujarat Authority for Advance Ruling ( AAR ) held that Goods and Services Tax ( GST ) is payable on goods supplied under a fraudulent order, even if no payment is received from the recipient.

The applicant argued that since the transaction lacked valid consent and consideration, it should not be treated as a supply under GST law. They also referred to the principles of the Indian Contract Act and a Supreme Court ruling in Devas Multimedia Pvt. Ltd. v. Antrix Corporation Ltd. to contend that a contract tainted by fraud is void and so should not trigger a tax liability.

The AAR ruled that the applicant is liable to pay GST on the goods supplied under the fraudulent order, as the transaction qualifies as a “supply” under Section 7 of the CGST Act and Section 20 of the IGST Act, read with Section 12 governing time of supply.

No ITC on Share Buyback Expenses Unless Linked to Taxable Supply: AAR In Re: M/s.Gujarat Narmada Valley Fertilizers & Chemicals Limited CITATION: 2025 TAXSCAN (AAR) 117

In the case of Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC), the Gujarat Authority for Advance Ruling (AAR) held that the Input Tax Credit (ITC) on expenses incurred for buyback of shares is not admissible under GST laws, as such transactions involve securities which are neither goods nor services.

The central issue before the AAR was whether GNFC could claim ITC on various expenses incurred during the share buyback process, such as professional and legal fees. GNFC submitted that these expenses were in the course or furtherance of business, and hence, were eligible for ITC under Section 16(1) of the CGST Act, 2017.

The AAR held that since the buyback of shares is a transaction in securities, the related expenses do not relate to a supply of goods or services, and so do not satisfy the primary condition for availing ITC under Section 16(1) of the CGST Act. The AAR clarified that even if such a transaction contributes to business strategy or value creation, it cannot qualify for ITC if it is not connected to a taxable supply.

Geometry Compass Box Classified as Mixed Supply, Attracts 18% GST: AAR In Re: M/s.AMARDEEP UDYOG CITATION: 2025 TAXSCAN (AAR) 118

The Maharashtra Authority for Advance Ruling (AAR) ruled that the supply of a Geometry Compass constitutes a mixed supply under Section 2(74) of the CGST Act, 2017, and is taxable at 18% GST, not a composite supply. The applicant, Amardeep Udyog, a partnership firm engaged in the trading of stationery products and readymade garments, received a purchase order from BMC dated June 11, 2024, for supplying stationery items to students from Standards 4th to 10th. Among the items to be supplied was a “Geometry Compass Box”, described to include a compass, divider, scale, three set squares (30°, 45°, and 60°), a protractor, an eraser, a pencil, and a sharpener.

The bench comprising D.P. Gojamgunde and M. Priya Jadhav observed that while the product includes a metal box, it also contains multiple tools, some of which, like pencils and sharpeners, are not typically bundled with mathematical instruments. The AAR observed that consumers may expect a basic geometry box to include certain tools, but the inclusion of items like erasers and sharpeners deviates from a naturally bundled supply.

The AAR ruled that the Geometry Compass Box supplied by M/s Amardeep Udyog qualifies as a mixed supply, classifiable under HSN 90178010, and taxable at 18% GST (9% CGST + 9% SGST).

Sada Tambaku Pre-Mixed with Lime Classified as Chewing Tobacco, Attracts 28% GST: AAR In Re: ZenTobacco Private Limited CITATION: 2025 TAXSCAN (AAR) 120

The Gujarat Authority for Advance Ruling (AAR) ruled that “sada tambaku” pre-mixed with lime is classifiable as chewing tobacco under HSN 24039910 and is liable to Goods and Services Tax (GST) at the rate of 28%, along with applicable compensation cess.

The AAR found that the process of mixing lime with raw tobacco transforms it into a new product fit for chewing, thereby qualifying it as manufactured chewing tobacco. So, it falls outside the scope of HSN 2401 and is appropriately classifiable under HSN 24039910. The Authority ruled that the process amounts to manufacture and that the applicant’s product “sada tambaku pre-mixed with lime” is not unmanufactured tobacco. It is subject to GST at the rate of 28% and compensation cess as per Notification No. 1/2017-Compensation Cess (Rate). The AAR ruled that the applicant is not entitled to an exemption from cess and must classify the product under the appropriate manufactured tobacco heading.

Contract Service related to water quality monitoring and management amounts to pure service, Exempt from tax: AAR In Re: SUNANDAENVIRONMENTAL INTERNATIONAL PRIVATE LIMITED CITATION: 2025 TAXSCAN (AAR) 121

In a recent ruling, the West Bengal Authority for Advance Rulings (AAR) has ruled that Contract Service related to water quality monitoring and management amounts to pure service and are exempted from tax.

A two member bench of Dr. Tanisha Dutta and Jaydip Kumar Chakrabarti found that these supply both pure service and composite are provided to The Public Health Engineering Directorate, Govt. of West Bengal, under Jal Jeevan Mission for supplying of drinking water which function is entrusted to a Panchayat under article 243G or to a municipality under article 243W of the of the Constitution of India. Further held that except the contract of services mentioned in (v) as above, all services referred to in the question can be regarded as Pure Service and as such they qualify for exemption under serial no. 3 of Notification No. 12/2017-Central Tax (Rate) Dated 28.06.2017, as amended.

No GST on Rotary Club Membership and Admission Fees: AAAR In Re: RotaryClub of Mumbai Queens Necklace CITATION : 2025 TAXSCAN (AAAR) 116

The Maharashtra Appellate Authority for Advance Ruling (AAAR) ruled that no Goods and Services Tax (GST) is payable on membership subscription and admission fees collected by Rotary Club of Mumbai Queens Necklace, as such collections are not considered a “supply of services” under the CGST Act, 2017.

The bench comprising Sungita Sharma and Shri Rajiv Jalota observed that the amounts collected were entirely used for internal administrative purposes, without conferring any individual benefits or services upon members. They observed that the club’s objectives, such as promoting peace, education, and sanitation, were social in nature and not in furtherance of business.

18% GST on Construction of EHV Substations/Lines for Dedicated User of MSETCL through Contractor: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently held that the construction of Extra High Voltage (EHV) substations and transmission lines conducted by Maharashtra State Electricity Transmission Company Limited (MSETCL) through contractors for specific users constitutes a taxable supply and attracts 18% Goods and Services Tax (GST).

The Bench of D.P. Gojamgunde, Joint Commissioner of State Tax, and Priya Jadhav, Joint Commissioner of Central Tax observed that the nature of the work is not incidental to the transmission of electricity, but rather the execution of civil and electrical works for dedicated usage. The Authority further stated that such services are not supplied to electricity consumers at large but to project-specific entities for infrastructural expansion and shall attract 18% GST.

18% GST on Construction of New Transmission Bay/Express Feeder of Maharashtra Electricity Co.: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently held that the construction of a new transmission bay or express feeder by Maharashtra State Electricity Transmission Company Limited (MSETCL), when undertaken through a contractor and funded by a third-party end-user would attract Goods and Services Tax (GST) at the rate of 18%.

The AAR Bench, comprising Shri D.P. Gojamgunde, Joint Commissioner of State Tax, and Ms. Priya Jadhav, Joint Commissioner of Central Tax, observed that the exemption under Entry 25 is confined to the supply of electricity transmission services to distribution licensees or consumers of electricity.

In the present case, the construction of a dedicated bay or feeder for a specific user would not constitute such supply and was instead, deemed as a contractual agreement to perform construction work for a consideration paid by the beneficiary.

Shifting/Raising Height of Transmission Towers/Lines through Contractor attracts 18% GST: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently held that the activity of shifting or raising the height of transmission towers or lines carried out through a contractor, for a dedicated consumer like the National Highways Authority of India or Indian Railways amounts to a taxable supply under Goods and Services Tax (GST) regime and attracts tax at the rate of 18%.

The Bench of D.P. Gojamgunde, Joint Commissioner of State Tax, and Priya Jadhav, Joint Commissioner of Central Tax observed that the activity in question is not covered under the exemption for transmission and distribution of electricity under Entry 25 or the ancillary services under Entry 25A of Notification No. 12/2017.

The authority further noted that the service is not rendered to consumers of electricity and does not involve any activity of power transmission per se. Rather, it amounts to a contractual service provided to entities seeking relocation of transmission assets for their project needs.

18% GST on MSETCL’s Allocation of Spare Existing Asset to Dedicated Consumers for Specified Duration on Payment: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently ruled that the Maharashtra State Electricity Transmission Company Limited (MSETCL) is liable to pay 18% Goods and Services Tax (GST) on consideration received by them for the temporary allocation of an existing transmission bay (a spare asset) to dedicated consumers during the period of when a new bay is being constructed.

The AAR Bench of D.P. Gojamgunde, Joint Commissioner of State Tax, and Priya Jadhav, Joint Commissioner of Central Tax observed that the activity in question was not transmission per se, nor incidental or ancillary to core service of electricity transmission.

The Bench ruled that permitting the use of a spare asset for a fixed duration against payment amounts to a supply of service akin to renting or temporary assignment of infrastructure and thus did not qualify for exemption under the cited notifications.

MSETCL cannot Claim GST ITC on Refund of Excess Deposit received from End Users after Completion of Work: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently held that the Maharashtra State Electricity Transmission Company Limited (MSETCL) is not eligible to claim Input Tax Credit (ITC) in cases where it refunds the unutilised balance of deposits received from end users after completion of contracted work.

The AAR Bench comprising D.P. Gojamgunde, Joint Commissioner of State Tax, and Priya Jadhav, Joint Commissioner of Central Tax examined the submissions and noted that GST is a supply-based tax and credit of tax paid on inputs can only be retained if there is a corresponding taxable output supply.

In the present instance, the excess amount refunded does not relate to any taxable supply, and thus cannot form part of the value of supply under Section 15 of the CGST Act. Therefore, the Bench ruled that ITC to the extent relatable to such refunded amount is not admissible.

Maharashtra Electricity Transmission Co. Liable to Pay GST on Additional Deposit Received from End Users for Work Completion: AAR In Re: M/s.Maharashtra State Electricity Transmission Company Limited CITATION : 2025 TAXSCAN (AAR) 122

The Maharashtra Authority for Advance Ruling (AAR) recently held that Maharashtra State Electricity Transmission Company Limited (MSETCL) is liable to pay Goods and Services Tax (GST) on additional deposits collected from end users to cover shortfalls in estimated project costs upon the final completion of works.

The Bench ruled that such payments, although received at a later stage are in lieu of consideration for a taxable supply and must be subjected to GST. The bench further clarified that the time of supply in such cases shall be the date of receipt of the additional deposit or the date of invoice, whichever may be earlier, as per the provisions of the CGST Act.

Accordingly, the AAR concluded that MSETCL is liable to pay GST on additional deposits received from dedicated consumers after project completion to cover any cost shortfall in respect of works undertaken.