GST dept moves SC to tax cos' repairing charges to civic body for power lines
This story was originally published at 19:12 IST on 6 May 2026
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NEW DELHI – The goods and services tax department Wednesday moved the Supreme Court, seeking a tax under reverse charge basis on transactions of companies paying charges to municipal corporations for repairing and restoring the dug out portion of roads and pavements after electricity distribution lines have been laid there. The apex court listed a petition by the department against Torrent Power Ltd. for hearing on Thursday.
Torrent Power is engaged in the business of transmission and distribution of electricity in Gujarat, Maharashtra and Uttar Pradesh. During the course of routine maintenance and network enhancement to distribute electricity, Torrent Power has to dig out tranches on public roads which are maintained by the municipal corporation. The dug out portion of the road and pavement is then repaired and restored by the municipal corporation.
Thereafter, the Ahmedabad Municipal Corporation recovers reimbursement of the repairing and restoration charges from Torrent Power, which are fixed based on the type of the road. In 2021, the tax department issued a notice to Torrent Power, seeking details of the road opening permit charges paid by the company to the municipal corporation as well as the goods and services tax paid on reverse charge basis on such services received from the civic body.
Opposing the notice, Torrent Power said that the transactions of payment of repairing or restoration charges to the civic body did not involve any taxable service, and therefore, the company was not liable to pay any tax on such charges on a reverse charge basis. Thereafter, the tax department passed a demand order against Torrent Power.
In September, the Gujarat High Court ruled that it was mandatory for the distribution licensee to make compensation for damage caused while laying down the distribution lines by digging up the road. The contention of the tax department that such restoration or repairing of the road is not within the scope of the sovereign function of the civic body couldn't be accepted because it was the function of the municipality to repair and restore any damaged road, said the court.
The reimbursement of the repairing and restoration charges of the damaged road for laying down the distribution lines by Torrent Power as per the provision of the Electricity Act, 2003 would not be covered by the scope of supply as per the Central Goods and Services Tax Act, 2017 in any manner whatsoever by any stretch of imagination, said the high court. Challenging the high court's order, the tax department moved the apex court.
On Wednesday, shares of Torrent Power Ltd. ended unchanged at INR 1,734.00 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Avishek Dutta
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