Clarifications regarding GST in respect of certain services

Circular No. 34/8/2018-GST

1 F. No. 354/17/2018-TRU

Government of India
Ministry of Finance
Department of Revenue
Tax research Unit


Room No. 146G, North Block,

New Delhi, 1 st March 2018

To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/

Commissioner of Central Tax (All) / The Principal Director Generals/

Director Generals (All)


Subject: Clarifications regarding GST in respect of certain services

I am directed to issue clarification with regard to the following issues as approved by the Fitment Committee to the GST Council in its meeting held on 9th , 10th and 13th January 2018:-

S. No. Issue Clarification
1. Whether activity of bus body building, is a supply of goods or services? In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case.
2. Whether retreading of tyres is a supply of goods or services? In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Rubber used for retreading is an ancillary supply. Which part of a composite supply is the principal supply, must be determined keeping in view the nature of the supply involved. Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply.

Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres, is a supply of goods (retreaded tyres under heading 4012 of the Customs Tariff attracting GST @ 28%)

3. Whether Priority Sector Lending Certificates (PSLCs) are outside the purview of GST and therefore not taxable? In Reserve Bank of India FAQ on PSLC, it has been mentioned that PSLC may be construed to be in the nature of goods, dealing in which has been notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 vide Government of India notification dated 4thFebruary, 2016. PSLC are not securities. PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT.

In GST there is no exemption to trading in PSLCs. Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III ofnotification No. 1/2017-Central Tax(Rate). GST payable on the certificates would be available as ITC to the bank buying the certificates.

4. (1) Whether the activities carried by DISCOMS against recovery of charges from consumers under State Electricity Act are exempt from GST?

(2) Whether the guarantee provided by State Government to state owned companies against guarantee commission, is taxable under GST?

(1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No. 12/2017- CT (R), Sl. No. 25. The other services such as, –i. Application fee for releasing connection of electricity;

ii. Rental Charges against metering equipment;

iii. Testing fee for meters/ transformers, capacitors etc.;

iv. Labour charges from customers for shifting of meters or shifting of service lines;

v. charges for duplicate bill;

provided by DISCOMS to consumer are taxable.

(2) The service provided by Central Government/State Government to any business entity including PSUs by way of guaranteeing the loans taken by them from financial institutions against consideration in any form including Guarantee Commission is taxable.


2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board.

Yours Faithfully,

Harsh Singh
Technical Officer (TRU)
Tel: 011-23095543

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