Valuation of supply— Section 15 of CGST Act— The only issue to discuss by this forum in this appeal is whether the act of recovering electricity expenses by the appellant is covered under the category of pure agent or Not?

Authority for Advance ruling has observed that in the instant case there is no clear authorization made by the lessee on which the supplier (lessor) acts as a pure agent of the recipient of the supply, when he makes the payment to the third party. The rent agreement itself not become an authorization as nowhere in the said agreement has the ‘reimbursement’ term been mentioned. Further applicant (lessor) does not enter into a contractual agreement with the recipient (Lessee) of supply to act as pure agent to incur expenditure or costs in the course of supply services. Hence, the act of working as a ‘pure agent’ has not been phrased out. Thus, reimbursement of electricity expenses had not been made on actual basis, by the lessee to lesser as it had been collected in advance with rent and further adjusted by raising the invoice/bill/memo/document by the lessor. Therefore, in the instant case, the so called reimbursement of electricity expenses would form part of taxable value in term of clause (c) sub-section (2) of section 15 of the CGST Act, 2017.

According to this authority, the appellant has failed to establish themselves as a pure agent. Therefore, in the instant case, the so called reimbursement of electricity expenses would form part of taxable value in term of clause (c) subsection (2) of section 15 of the CGST Act, 2017.

Held that— Appellant is not working as pure agent.