GST Appellate Authority Deadlock on Electricity Deposit Works
The Appellate Authority for Advance Ruling failed to reach a decision on whether electricity deposit works qualify for GST exemptions.
- Ruling
- Order No. 10/AAAR/2020 dated 23.01.2020
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if deposit works are part of electricity transmission services.
- The authority members disagreed on whether these services are taxable or exempt.
- No final ruling was issued because the members could not reach a consensus.
In short
The Uttar Pradesh Power Transmission Corporation asked if the infrastructure work they do for customers, known as 'Deposit Works', is part of their main electricity transmission service. If it were considered part of the main service, it might qualify for a GST exemption. Because the two members of the Appellate Authority for Advance Ruling (AAAR) disagreed, they could not provide a final answer.
What has changed
How it worked before
Businesses were looking to this appeal to clarify if infrastructure creation for electricity transmission should be taxed as a separate service or treated as part of the exempt transmission supply.
What has changed
Nothing has changed because the authority reached a deadlock. The original ruling is no longer in effect, meaning there is currently no official guidance from this appellate body on how to tax these specific deposit works.
Who this affects
Electricity transmission and distribution utilities that perform infrastructure deposit works for their customers.
An example
Imagine a private power utility in another state that performs similar infrastructure work for a new industrial park. They might hope this ruling would exempt their work from GST. Because the UP AAAR reached no conclusion, the utility cannot use this case to support an exemption claim. They must continue to evaluate their tax liability based on their own interpretation of the law and professional advice.
What you should do
Since this ruling is not a final decision, it does not set a legal precedent for other companies. You should consult with your tax advisor to determine your tax position based on current GST laws, as this order cannot be used to justify your tax treatment to your local officer.
If you do nothing
If you assume this deadlock provides a 'green light' for your own tax practices, you risk a dispute with your local tax officer. Tax authorities may disagree with your interpretation, leading to demands for unpaid tax, interest, and penalties. Relying on a non-decision as if it were a favorable ruling is a significant compliance risk.
The terms explained
- Deposit Works
- Infrastructure projects, such as building power lines or substations, that a utility company undertakes specifically for a customer.
- Appellate Authority for Advance Ruling (AAAR)
- The higher body that reviews decisions made by the initial Advance Ruling authority when a business or tax officer challenges the first outcome.
- Input Tax Credit (ITC)
- The mechanism that allows a business to reduce its tax liability by claiming credit for the GST paid on purchases used for business purposes.
The ruling in detail
Appellate Authority for Advance Ruling
M/s Uttar Pradesh Power Transmission Corporation Ltd
Order No. 10/AAAR/2020 dated 23.01.2020 · Uttar Pradesh
Questions before the authority
- Whether the Deposit Work undertaken by Appellant is an integral part of supply of services of transmission or distribution of electricity?
- Whether the Deposit Work undertaken by Appellant is ancillary to the principal supply of transmission or distribution of electricity?
- Whether the exemption given under Entry No. 25 of the exemption notification for services by way of transmission or distribution of electricity by an electricity transmission or distribution utility will be applicable on Appellant?
- Whether ITC is available to the appellant in undertaking Deposit Works i.e. creating infrastructure for electricity transmission?
Facts
The appellant is a state transmission utility entrusted with the business of transmitting electricity. They undertake 'Deposit Works' for customers, which involve creating infrastructure for electricity transmission, and sought a ruling on whether these activities are integral or ancillary to their principal supply of electricity transmission. The appellant also questioned the applicability of GST exemptions and the availability of Input Tax Credit for these works.
Ruling
The Appellate Authority for Advance Ruling was deadlocked due to a difference of opinion between the two members. Consequently, no ruling could be issued on the questions raised by the appellant. The original Advance Ruling Order No. 37 dated 05.08.2019 is deemed to be not in operation.
Reasoning
The CGST member and the SGST member held divergent views regarding the nature of the 'Deposit Work'. The CGST member opined that these services are independent and not naturally bundled with the supply of electricity, whereas the SGST member concluded that they are part and parcel of the transmission and distribution of electricity. Due to this fundamental disagreement on the interpretation of Section 2(30) of the CGST Act 2017 and the nature of the supply, the authority could not reach a consensus. The matter was governed by the provisions of Sub Section 3 of Section 101 of the CGST Act, 2017.
Provisions relied on
- Section 2(30) of the CGST Act 2017
- Section 101(3) of the CGST Act 2017
- Entry No. 25 of the exemption notification
- Circular No. 34/8/2018-GST
- Circular No. 131/13/2010-ST
- Section 43 of the Electricity Act 2003
- Section 45(3) of the Electricity Act 2003
For the practitioner
This order serves as a **non-precedential outcome** because the appellate authority failed to reach a consensus. It does not settle the taxability or ITC eligibility of 'Deposit Works' for power transmission utilities. Practitioners should note that the original ruling is **deemed to be not in operation**, leaving the legal position on this specific issue unresolved at the appellate level.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/up_aaar_10_2019-20_23.01.2020_upptcl.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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