This circular provides clarifications on the GST treatment of certain activities and services to ensure uniform interpretation and implementation of the law.

It clarifies that bus body building involves a composite supply of goods and services. Whether such activity is treated as a supply of goods or services depends on the principal supply, which must be determined based on the facts and circumstances of each case.

In case of retreading of tyres, the circular clarifies that where the process of retreading is predominant and rubber is only incidental, the activity is treated as a supply of services. However, where retreaded tyres are supplied using old tyres belonging to the supplier, it constitutes a supply of goods and is taxable as retreaded tyres at the applicable GST rate.

The circular further clarifies that Priority Sector Lending Certificates (PSLCs) are goods and are not securities. Trading in PSLCs is taxable under GST at the standard rate of 18% under the residual entry, and the GST paid is eligible for input tax credit to the recipient.

With respect to electricity distribution, it clarifies that transmission and distribution of electricity by utilities is exempt from GST. However, ancillary charges such as application fees, meter rent, testing fees, labour charges for shifting of meters or service lines, and charges for duplicate bills are taxable. It also clarifies that guarantee services provided by Central or State Governments to business entities against guarantee commission are taxable under GST.