GST leviable on reimbursement of electricity and water charges and to be included in the value of supply

Last updated: 24 December 2021

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Quick Summary

The Maharashtra Authority for Advance Ruling (AAR) has ruled that Goods and Services Tax (GST) is applicable on electricity and water charges reimbursed by a licensee to a property owner. The ruling clarifies that these charges are not merely repayments of expenses but are considered part of the consideration for renting the immovable property. The property owner was unable to establish themselves as a 'pure agent', meaning these reimbursed costs must be included in the total value of the supply for GST calculation.

Court :
AAR, Maharashtra

Brief :
The AAR, Maharashtra in the matter of M/s. Indiana Engineering Works (Bombay) Pvt. Ltd. [Advance Ruling No. GST-ARA-120/2019-20/B-114 dated December 16, 2021] held that, GST payable on electricity charges and water charges as per meter reading and collected from the recipients on actual reimbursement basis. Further, there is no authorization, obtained to act as pure agent and to make payment to third parties, therefore the assessee cannot be considered as a pure agent.

Citation :
Advance Ruling No. GST-ARA-120/2019-20/B-114 dated December 16, 2021

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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