Punjab AAR imposes 18 per cent GST on Transmission Line Shifting by PSTCL for NHAI

Punjab AAR imposes 18 per cent GST on Transmission Line Shifting by PSTCL for NHAI

The Punjab bench of the Authority for Advance Rulings has determined that the services offered by Punjab State Transmission Corporation Limited (PSTCL) concerning the relocation of transmission lines upon the request of the National Highways Authority of India (NHAI) will fall under Service Head 998631. Accordingly, these services will attract a Goods and Services Tax (GST) rate of 18 per cent.

The applicant, PSTCL, was predominantly involved in the transmission of electricity, which was exempted under the Goods and Services Tax (GST) Act. Seeking clarity on the applicable GST provisions and rate for the relocation of transmission lines requested by NHAI for road widening purposes, PSTCL applied for an advance ruling.

Additionally, PSTCL sought clarification on whether GST should be levied on material, labour, and supervision charges or only on supervision charges concerning the shifting of transmission lines.

The Bench comprising Varinder Kaur (Central Tax) and Viraj Shyamkarn Tidke (State Tax) observed that the applicant's main business cantered around electricity transmission. However, they also engaged in contribution work or deposit work, which were supplementary services related to their primary activities. These ancillary supplies were provided upon specific requests and were not part of their regular business operations. Furthermore, these services were charged separately and not bundled with the principal supply of electricity transmission.

Based on these considerations, the Bench concluded that the services provided by the applicant for 'Contribution Work' should be classified under HSN/SAC 998631 and would attract GST at a rate of 18 per cent.

The Bench provided clarity on the transaction value, emphasising that even though NHAI bore the complete cost of material, labour, and supervision charges incurred by the applicant for the shifting work, the ownership of the transmission system remained with the applicant. Referring to Section 15(2)(b) of the CGST Act, the Bench explained that the cost of such assets, incurred by a third party (NHAI, in this case), should be included in the value of supply for GST levy.

In light of these considerations, the Bench ruled that the transaction value should be considered as the price paid or payable, and GST would be applicable on the total transaction value, which included the cost borne by NHAI for the shifting work.