The Applicant is liable to pay GST on the Operational & Management Expenses charged from its subsidiary companies.
Levy of GST— The Applicant has submitted an Application for Advance Ruling on the following issues:
i. Whether there is a supply of service by the applicant Corporation in recovery of expenses from DISCOMs as well as UPPTCL and other power companies by way of book entries and hence, liable to GST;
ii. Whether inclusion clause in subsection (2) of Section 15 of CGST Act, 2017 providing for inclusion of incidental expenses in value of supply apply to applicant's case (i.e. recovery, by way of book entries, of O&M expenses from DISCOMs as well as UPPTCL and other power companies) when there is no supply of a service by the Corporation to the DISCOMs as well as UPPTCL and other power companies so as to make the stated recoveries from DISCOMs, UPPTCL and other power companies liable to GST, if answer to question 1 is negative;
iii. If the answer to (i) or (ii) is in affirmative, whether recovery against certain expenses such as interest cost, salary, depreciation etc. which do not attract GST due to either they being exempt or non taxable will also be liable to GST.
iv. Whether transfer of miscellaneous incomes of applicant Corporation to DISCOMs, UPPTCL and other power companies will attract GST;
v. If the answer to (i) or (ii) is in affirmative, whether GST paid on all taxable expenditures will be allowed as ITC to the Applicant for further adjustment of GST Payable on recovery of expenses by way of book entries.
Held that— In respect to question no. 1, the activities for which O & M Expenses are being passed on and collected are 'Supplies' for the purpose of Section 7(1) of CGST Act, the same would be liable to be charged to GST as per the applicable rate laid down under the law and in accordance with the provisions of Section 15 of CGST Act.
In respect of question no. 3, it is held that the employees recruited by the one office and working in another office does not have any employer-employee relationship with the office where they are actually working. The expenses incurred on such employees claimed from the actual employer would constitute supply and accordingly liable to pay GST. Same is the case with 'Medical Expenses' or 'Recruitment Expenses'. Accordingly, we hold that the expenses incurred on account of heads claimed to be exempted are also liable to be charged to GST.
Recovery of expenses are classifiable as 'Supply', so would be the 'Income'. The same is also classifiable as 'Supply' and would be chargeable to GST.
In respect to the last question, while ITC may be availed, in principle, but the admissibility of the same would depend upon the provisions of Section 16 & 17 of the CGST Act read with Rule 36 of the CGST Rules.
The Applicant is liable to pay GST on the Operational & Management Expenses charged from its subsidiary companies.
Levy of GST— The Applicant has submitted an Application for Advance Ruling on the following issues:
i. Whether there is a supply of service by the applicant Corporation in recovery of expenses from DISCOMs as well as UPPTCL and other power companies by way of book entries and hence, liable to GST;
ii. Whether inclusion clause in subsection (2) of Section 15 of CGST Act, 2017 providing for inclusion of incidental expenses in value of supply apply to applicant's case (i.e. recovery, by way of book entries, of O&M expenses from DISCOMs as well as UPPTCL and other power companies) when there is no supply of a service by the Corporation to the DISCOMs as well as UPPTCL and other power companies so as to make the stated recoveries from DISCOMs, UPPTCL and other power companies liable to GST, if answer to question 1 is negative;
iii. If the answer to (i) or (ii) is in affirmative, whether recovery against certain expenses such as interest cost, salary, depreciation etc. which do not attract GST due to either they being exempt or non taxable will also be liable to GST.
iv. Whether transfer of miscellaneous incomes of applicant Corporation to DISCOMs, UPPTCL and other power companies will attract GST;
v. If the answer to (i) or (ii) is in affirmative, whether GST paid on all taxable expenditures will be allowed as ITC to the Applicant for further adjustment of GST Payable on recovery of expenses by way of book entries.
Held that— In respect to question no. 1, the activities for which O & M Expenses are being passed on and collected are 'Supplies' for the purpose of Section 7(1) of CGST Act, the same would be liable to be charged to GST as per the applicable rate laid down under the law and in accordance with the provisions of Section 15 of CGST Act.
In respect of question no. 3, it is held that the employees recruited by the one office and working in another office does not have any employer-employee relationship with the office where they are actually working. The expenses incurred on such employees claimed from the actual employer would constitute supply and accordingly liable to pay GST. Same is the case with 'Medical Expenses' or 'Recruitment Expenses'. Accordingly, we hold that the expenses incurred on account of heads claimed to be exempted are also liable to be charged to GST.
Recovery of expenses are classifiable as 'Supply', so would be the 'Income'. The same is also classifiable as 'Supply' and would be chargeable to GST.
In respect to the last question, while ITC may be availed, in principle, but the admissibility of the same would depend upon the provisions of Section 16 & 17 of the CGST Act read with Rule 36 of the CGST Rules.