GST payable on electricity charges and water charges according to the meter reading and collected from beneficiaries at the actual rate based on reimbursement: AAR


The Maharashtra Authority of Advance Ruling (AAR) ruled that the GST payable on electricity charges and water charges according to meter reading and collected from beneficiaries to be actual on the basis of the reimbursement.

The applicant, M / s. Indiana Engineering Works (Bombay) P. Ltd. concluded leave and license agreements dated 12.06.2017 with M / s. Capri Global Capital Ltd (“Licensee”), the Applicant authorized the 4th Floor of Indiana House for the use and occupancy of the Leased Premises for an agreed license fee payable monthly with service tax or GST.

The claimant requested the advance ruling on whether electricity and water charges paid by the claimant based on the meter reading and collected from recipients on the basis of an actual refund are subject to GST and whether the caller acts as a pure agent.

The AAR found that the main electricity meter is in the name of the Applicant: the service is not acquired from the main electricity supplier on the instructions of the tenant and therefore the applicant does not act as a pure agent of the tenant in this respect. Even after the tenant has vacated the premises, the electric (or main water) meter will remain in the name of the applicant. The supply below the main meter is not due to the instructions of a particular tenant. As regards a “pure agent”, the applicant maintains that the reimbursement of expenses, such as electricity costs, water supply costs, etc., incurred by him and received from the tenant are paid to the third-party vendors. In the present case, the applicant has the main electrical connection in his own name and has created different sub-connections at each location to know the actual consumption of the electricity and water loads by the tenants which must be distributed / collected from from them according to the floor space occupied. All these activities show that these supplies are for the account of the applicant and for the effective enjoyment of the premises. The applicant obtains these services from various agencies and it is the primary responsibility of the applicant to pay these agencies for the provision of said services at the first stage or at the first stage. The coram of Rajiv Magoo and TRRamnani decided that the rental of real estate would be the main supply and that the supply of other utilities such as electricity, water supply, fuel etc. main power. Therefore, utility charges in the form of electricity and water charges reimbursed to the applicant by the tenant form part of the value of the supply.

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