GST might be relevant at a fee of 18% on charging electrical car batteries at public charging stations, the Karnataka Authority for Advance Ruling stated.
The matter got here up earlier than the AAR when an influence distribution firm needed to arrange varied public charging stations for charging EVs. The corporate stated that it meant to cost tax and acquire an electrical car charging payment, which would come with two elements—vitality costs and repair costs.
Power cost refers back to the variety of items of vitality consumed.
The first difficulty that arose was whether or not the vitality costs can be handled as a provide of products or a provide of providers, and if the previous, whether or not the corporate might declare exemption beneath GST as the availability of electrical energy—which is handled as a provide of products—is exempt beneath the Act.
Due to this fact, the query earlier than the ruling authority was whether or not EV charging can be included beneath the class of provide of electrical energy or not.
The AAR stated that the exercise of charging an EV entails charging a battery, i.e., the conversion of electrical vitality to chemical vitality. Electrical energy, which is a ‘moveable’ property and categorised as a very good, just isn’t equipped to the patron as such however is transformed into chemical vitality, which is obtained by the patron within the EV battery, it stated.
Whereas clarifying its stance, the AAR additionally referred to a clarification issued by the Ministry of Energy, which stated that charging an EV doesn’t in any approach embody the sale of electrical energy to any particular person because the electrical energy is consumed inside the premises owned by the charging station, which can be related to the distribution system for receiving electrical energy.
The ruling authority held that the exercise of charging an EV just isn’t a provide of electrical energy or a provide of any moveable property, however a provide of service.
It dominated that ‘provide {of electrical} vitality’ and ‘service costs’ collectively are to be handled as provide of service and would entice a GST fee of 18%. It additionally stated that the corporate might be entitled to set off its tax liabilities towards its enter tax credit.
