Battery charging service provided by public charging station attracts 18% GST

The Karnataka Authority for Advance Ruling (AAR) has determined that providing battery charging services for electric vehicles at public charging stations constitutes a supply of service, not a sale of electricity. This service is classified under 'Maintenance and repair services of transport machinery and equipment' and therefore attracts an 18% Goods and Services Tax (GST). The ruling clarifies that the electricity used is consumed by the charging station itself as a consumable.

The AAR, Karnataka, in M/s. Chamundeswari Electricity Supply Corporation Ltd. [Advance Ruling No. KAR ADRG 24/2023 dated July 13, 2023] ruled that the activity of charging battery of electrical vehicle is ‘supply of service’ covered under SAC 998714 ‘Maintenance and repair services of transport machinery and equipment’ and attracts GST @18% as per Sl. no. 25(ii) of the Notification No. 11/2017-Central Tax (Rate), dated June 28, 2017 ("the Rate Notification").

Facts

M/s. Chamundeswari Electricity Supply Corporation Ltd. ("the Applicant") want to set up various Public Charging Stations ("PCS") for charging electric vehicles. The Applicant would like to issue tax invoices and collects "Electric Vehicle Charging Fee" from the customers which includes two components i.e. energy charges and service charges.

The Applicant submitted that the sale of energy is exempt as per Sl. No. 104 of the Notification No. 2/2017-Central Tax (Rate), dated June 28, 2017 ("the Goods Exemption Notification") and distribution of electricity is also exempt as per Sl. No. 25 of the Rate Notification.

The Applicant filed an application before the AAR, Karnataka for seeking clarification regarding the charging of electrical vehicle battery.

Issue

Whether the battery charging services provided by public charging station is exempt from GST?

Held

The AAR, Karnataka, in Advance Ruling No. KAR ADRG 24/2023 held as under.

• Observed that, the activity of charging of electric vehicle does not amount to supply of electricity or supply of any moveable property, but it is a supply of service.
• Noted that, the Applicant activity of charging of battery does not involve sale of electricity to any person as the electricity is consumed by the charging station thus the electrical energy is put to use as a consumable for charging of battery.
• Held that, the activity of the Applicant i.e. charging battery of Electrical Vehicle is treated as ‘supply of service’ which is covered under SAC 998714 which covers ‘Maintenance and repair services of transport machinery and equipment’ and accordingly attracts GST @18%.