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LEGAL UPDATE

as accused, besides the company, its replaced with the norm that it is a energy supplies, they are even less
chairman-cum-managing director regular product that people pay for, likely to pay their full bills.
Cherukuri Sridhar and another just like food, cell phones, etc."
additional director Akkineni Satish. It Greenstone and his co-authors Robin Supreme Court upholds
was alleged that the private firm Burgess (London School of Economics
based in Hyderabad and its directors and Political Science), Nicholas Ryan levy of GST on lottery,
had availed credit facilities on multiple (Yale University), and Anant Sudarshan gambling
banking arrangements. (Chicago) offer three changes to the The Supreme Court upheld the levy of
"It was further alleged that the current system - subsidy reform, Goods and Service Tax (GST) on sale of
accused had involved in falsification/ changing social norms and improved lotteries and gambling across the
fabrication of books of accounts, technology in a recently published country.
fudging of stock statements, research report. A bench comprising justices Ashok
tampering of balance sheets, round On subsidy reform, the report suggests Bhushan, R Subhash Reddy and MR
tripping of funds, etc.," CBI that "Consumers of all incomes often Shah ruled that the Central Goods and
spokesperson R K Gaur said. enjoy electricity subsidies which are
Services Tax Act, 2017 and the
frequently regressive and poorly notifications issued there under
Electricity must be treated targeted. Removing these subsidies bringing lottery and gambling under
and supporting the poor through
as commodity, not a right direct transfers will allow them to pay the GST net are valid. The top court
Is electricity a right or a commodity? for power without distorting the said that "while determining the
This is a question which all stakeholders electricity market." taxable value of supply the prize
need to address. money is not to be excluded for the
As regards changing social norms, it purpose of levy of GST"
"Electric utilities in many developing proposes that "introducing consumer
"The inclusion of actionable claim in
countries often don't get fully paid by incentives and changes to the bill
consumers for the power they supply collection process could reduce definition "goods" as given in Section
which has led to widespread outages electricity theft and non-payment of 2(52) of CGST Act, 2017 is not contrary
and rationing of power. This poor bills." to the legal meaning of goods and is
electricity access may be a On improved technology, it concludes neither illegal nor unconstitutional," it
consequence of society treating that "technology-based reforms such as held. According to judges, it is well
electricity as a right rather than a using smart meters would explicitly link settled that the courts have very
commodity to be bought and sold," payments and supply at the individual limited role to play with regard to
according to a research on 'The level." taxing policy of the legislature.
Consequences of Treating Electricity as This research suggests that the root of Challenging Section 2(52) of the 2017
a Right' at the University of Chicago the problem may lie in the fact that Act and notifications levying tax on
and partner institutes. lottery, Skill Lotto Solutions, a dealer
society too often views electricity as a
"It is critical to provide lifeline right that does not need to be paid for, for sale and distribution of lotteries
electricity to the poorest, but doing so setting off a vicious cycle: Consumers organised by Punjab, contended that
in a way that causes electricity markets regularly don't pay their full bills which the law was violative of the
to fail, will harm everyone," said the the governments often condones. fundamental rights and contrary to the
study's co-author Michael Greenstone, Power utilities then lose money every SC judgment (Sunrise Associates Vs
the Milton Friedman Distinguished time they supply more electricity. government of NCT of Delhi) that held
Service Professor in Economics and Eventually, these companies become that lotteries were merely actionable
director of the Energy Policy Institute bankrupt and choose to cut-off supply claims and cannot be defined as
at the University of Chicago (EPIC). He because they can no longer afford to 'goods'.
added, "Our view is that no solution pay generators without recovering It said that the GST Council wrongly
will work in the end, unless the social costs from consumers. And finally, viewed lotteries as "goods" while they
norm that electricity is a right is because customers then receive poor were only "actionable claims". T

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