In a significant judgment, the Supreme Court of India dismissed the central government’s appeal challenging a Delhi High Court ruling that exempted regulatory charges levied by electricity bodies such as the Central Electricity Regulatory Commission (CERC) and Delhi Electricity Regulatory Commission (DERC) from the ambit of GST.

The core issue was whether the license fees, application processing charges, and other levies collected by regulatory bodies constitute consideration for a supply of service under the GST framework.

The Court concluded:

“These charges are collected as part of sovereign functions and not for commercial services rendered. Therefore, they are not liable to GST.”

This ruling is a significant precedent for other regulatory authorities like TRAI, IRDAI, and SEBI who perform quasi-judicial and administrative functions.

Experts believe the verdict will provide clarity and consistency in the application of GST to government functions, and may lead to re-examination of similar levies across sectors.