Chennai: A GST demand notice seeking 9.6 crore from Tamil Nadu Electricity Regulatory Commission (TNERC) for the period between 2017 and 2022 has been stayed by Madras high court.
Justice J Sathya Narayana Prasad granted the interim relief on Thursday, on a plea moved by TNERC claiming that its functions cannot be termed as a business and therefore GST cannot be imposed on it.
The court then adjourned the hearing to July 1 and directed the department to file its response to the plea.
Senior advocate P Wilson, representing TNERC, submitted that the commission was established to perform various functions, including judicial and legislative functions, and had the trappings of a court and its proceedings are judicial.

“TNERC is working on the grants given by the state govt and the fees/fines/penalties it is collecting for various functions are deposited directly into the govt’s public accounts,” Wilson said.

He added that the state’s income cannot be taxed by the Union unless it is generated out of a trade or business as per Article 289 of the Constitution.

According to the department, the services offered by TNERC such as determination of tariff for generation, supply, transmission and wheeling of electricity, regulation of electricity purchases and procurement, process of distribution licensees, facilitation of intra-state transmission and others would fall within the ambit of supply which is taxable.

Therefore, it demanded TNERC to pay 6.9 crore tax along with applicable interest and also proposed to impose a penalty.

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