GST Not Applicable on Regulatory Fees of Electricity Commission

Case Details: Karnataka Electricity Regulatory Commission vs. Joint Commissioner Central Tax [2026] 185 taxmann.com 9 (Karnataka)

Judiciary and Counsel Details

S.R. Krishna Kumar, J.
Ashwin G. Raj, Smt. Keerthi Krishna Reddy & Abhishek K., Advs. for the Petitioner.
Akash B. Shetty & K.S. Bheemaiah, Advs. for the Respondent.

Facts of the Case

The petitioner was issued a show cause notice (SCN) proposing the levy of GST on regulatory fees collected in discharge of its statutory functions, which was subsequently confirmed by order. It was contended that its regulatory and adjudicatory functions were statutory and did not constitute ‘business’ under GST and were excluded under Schedule III, and that such fees were not consideration. Reliance was placed on ‘Central Electricity Regulatory Commission v. Additional Director Directorate General of GST Intelligence (DGGI) [2025] 170 taxmann.com 406 (Delhi)’. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that Section 7 read with Schedule III of the CGST Act excludes statutory functions performed by regulatory authorities from the scope of ‘supply’ and that Section 9 cannot be invoked in the absence of a taxable supply. It held that the regulatory and adjudicatory functions of electricity commissions do not constitute ‘business’ and that fees collected for such functions are not consideration in the course or furtherance of business. It was further held that notifications issued under the GST framework cannot override the statutory exclusion provided under Schedule III. It was concluded that the SCN and the confirmatory order issued by the jurisdictional officer under CGST were without jurisdiction and liable to be quashed.