No GST On Tariff, Licence Fees Collected By Haryana Electricity Commission: Punjab Haryana High Court

The Punjab and Haryana High Court on 26 February set aside a show cause notice seeking GST on tariff petition and licence fees collected by the Haryana State Electricity Regulatory Commission, holding that these fees arise from statutory regulatory functions and are not in the course of business.

A Division Bench of Justice Lisa Gill and Justice Ramesh Chander Dimri allowed the writ petition and quashed the notice, observing:

“Learned counsel for respondents points out that review has been preferred against order dated…. However, it is conceded that there is no stay in the matter; in fact, notice has also not been issued therein.”

Counsel for the petitioner submitted that the controversy involved in this writ petition is identical to one decided by the Delhi High Court in Central Electricity Regulatory Commission v. The Additional Director, Directorate General of GST Intelligence (DGGI) and another, on 15 January 2025, along with connected matters.

The Court observed that the issue had already been addressed in an earlier decision involving the Punjab State Electricity Regulatory Commission and relied on the reasoning adopted by the Delhi High Court in Central Electricity Regulatory Commission v. Additional Director, DGGI.

Quoting from that judgment, the Court recorded:

“The grant of a license to transmit or distribute is clearly not in furtherance of business or trade but in extension of the statutory obligation placed upon a Commission to regulate those subjects.”

The Bench noted that the Commission receives tariff petition fees and licence fees while discharging statutory functions under Section 86 of the Electricity Act, 2003, which assigns state electricity regulatory commissions responsibilities such as regulating electricity tariffs, licensing transmission and distribution entities, and adjudicating disputes between electricity sector participants.

The Court observed that under the Central Goods and Services Tax Act, 2017, tax is attracted only when there is a supply of goods or services for consideration in the course or furtherance of business. The Delhi High Court had held that regulatory functions exercised by electricity regulatory commissions cannot be equated with trade, commerce, or other business activities contemplated under the statute.

It further noted that although the respondents had challenged the Delhi High Court ruling before the Supreme Court of India, the Special Leave Petition was dismissed on 21 July 2025. Counsel for the Union of India also conceded that the present case involved an identical controversy and could not point to any distinguishing factor.

Accordingly, the Court allowed the writ petition and set aside the notice proposing GST liability on the Commission's tariff petition and licence fees.

For the Appellants: Senior Advocate Chetan Mittal with Advocate Himanshu Gupta

For the Respondents: Advocate Ridhi Bansal