Additional Director Directorate General of GST Intelligence (DGGI) Vs Central Electricity Regulatory Commission

The Supreme Court of India has dismissed a Special Leave Petition (SLP) filed by the Directorate General of GST Intelligence (DGGI), thereby affirming the Delhi High Court's ruling that GST is not applicable to license fees collected by Electricity Regulatory Commissions.

The case originated from a service tax and GST demand on license fees collected by the Central and Delhi Electricity Regulatory Commissions. The GST authorities argued that these fees constituted a taxable "supply of services" falling under Group Heading 99863 (support services to electricity, gas, and water distribution) of the GST Service Rates Notification. The regulatory bodies, however, contended that their functions were quasi-judicial and statutory obligations, not business activities subject to GST, thus falling under the exclusion for "services rendered by a court or tribunal" in Schedule-III of the CGST Act.

The Delhi High Court, in the case of Central Electricity Regulatory Commission Vs Additional Director Directorate General of GST Intelligence (DGGI) & Anr., had previously sided with the Commissions. It held that granting a license is a statutory obligation, not an activity in furtherance of business or trade. The High Court further stated that these Commissions perform quasi-judicial functions with the characteristics of a tribunal, and their services are thus excluded from the definition of "supply" under Schedule-III. It also rejected the Revenue's reliance on the definitions of "service" (Section 2(24)) and "business" (Section 2(17)) in the CGST Act, as well as the argument that the license fees constituted "consideration" under Section 2(31), emphasizing the absence of any inducement element.

The Supreme Court found no reason to interfere with the Delhi High Court's well-reasoned decision. This ruling solidifies the legal position that statutory commissions carrying out regulatory and quasi-judicial duties are not subject to GST on the fees they collect for licenses. This aligns with a similar stay granted by the Allahabad High Court in U.P. Electricity Regulatory Commission v. Addl. Commissioner of GST & Central Excise.