18% GST on Depository Contribution Works

18% GST on Depository Contribution Works

The Tamil Nadu bench of the Authority for Advance Ruling has held that Depository Contribution Works are classifiable under SAC 99873 and the applicable rate of tax is 9% of CGST and 9% as SGST is applicable. The applicant is one of the two subsidiaries of the Tamil Nadu Electricity Board and had sought an advance ruling on the issue of applicability of GST on the transactions between both subsidiary companies. The Tamil Nadu bench held that GST is applicable to the supply of operation and maintenance materials used in day to day functioning and transfer of capital assets. It also observed that GST is applicable to the deployment of employees of one subsidiary is the same as the supply of service. 

However, the Authority ruled that GST is not applicable on the transactions of physical fund flow between the companies by way of repayment of the existing loan, availing of fresh loans, etc. on actual basis without any interest component on such fund flow and income such as transmission charges, Scheduling, and Systems Operating charges, Reactive Energy Charges, etc. received from open access consumers by the applicant and adjusted through payable to the other subsidiary as both are money transactions. As such, the AAR stated, "Depository Contribution Works is classifiable under SAC 99873, and the applicable rate of tax is CGST @ 9% as per SI.No. 25 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 and SGST @ 9% as per SI.No. 25 of Notification No. II (2)/ CTR/ 532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended and the same is not exempted."

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