The charges for electricity and water charges recovered as reimbursements, even if at actuals, have the nature of incidental expenses in relation to renting of immovable property and are includible in the value of supply and are to be considered as transaction value for the purpose of levy of tax.
Levy of GST— The present application the applicant has leased 4th floor of the building, “Indiana House”, as per Leave and License Agreement entered into with the Licensee, where the Licensor is charging monthly License fee.
The applicant seeking an advance ruling in respect of the following questions—
a) Whether Electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis are liable to GST?
b) In the above scenario, whether the Appellant acts as a Pure Agent?
c) Is the Applicant liable to add value of Electricity and Water charges to the monthly License Fee if as per terms of the contract tenant user is paying for such utility services directly to the Service Provider i.e. Electricity Power Distributor/BMC, as the ease may be, even though Electric and Water meters continue to remain in the name of the Applicant?
In present case the applicant has got the main electric connection in its own name and has created different sub connections at each location to know the actual consumption of electricity and water charges by the tenants which are to be apportioned/recovered from them as per floor space occupied. All these activities show that these supplies are on applicant's own account and is for effective enjoyment of premises. The applicant procures those services from various agencies and it is the primary responsibility of the applicant to pay to those agencies for supply of said services at initial or first stage. We agree with the contention of the Jurisdictional officer that, making payment of electricity charges is the (primary) responsibility of the Licensor and not of the Licensee, as the property (main electric/water meters) is owned by the applicant and the electricity/water connection is obtained in the name of the applicant. The applicant is not paying the electricity/water bill on behalf of the Licensee.
Held that— In respect of question no. 1, electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis are liable to GST.
In respect of question no.2, the Appellant cannot be considered as a Pure Agent.
In respect to question no. 3, as the facts of the case do not lead to or show or mention such a situation, therefore, a hypothetical question based on mere assumptions (without proper underlying facts) cannot be answered.
The charges for electricity and water charges recovered as reimbursements, even if at actuals, have the nature of incidental expenses in relation to renting of immovable property and are includible in the value of supply and are to be considered as transaction value for the purpose of levy of tax.
Levy of GST— The present application the applicant has leased 4th floor of the building, “Indiana House”, as per Leave and License Agreement entered into with the Licensee, where the Licensor is charging monthly License fee.
The applicant seeking an advance ruling in respect of the following questions—
a) Whether Electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis are liable to GST?
b) In the above scenario, whether the Appellant acts as a Pure Agent?
c) Is the Applicant liable to add value of Electricity and Water charges to the monthly License Fee if as per terms of the contract tenant user is paying for such utility services directly to the Service Provider i.e. Electricity Power Distributor/BMC, as the ease may be, even though Electric and Water meters continue to remain in the name of the Applicant?
In present case the applicant has got the main electric connection in its own name and has created different sub connections at each location to know the actual consumption of electricity and water charges by the tenants which are to be apportioned/recovered from them as per floor space occupied. All these activities show that these supplies are on applicant's own account and is for effective enjoyment of premises. The applicant procures those services from various agencies and it is the primary responsibility of the applicant to pay to those agencies for supply of said services at initial or first stage. We agree with the contention of the Jurisdictional officer that, making payment of electricity charges is the (primary) responsibility of the Licensor and not of the Licensee, as the property (main electric/water meters) is owned by the applicant and the electricity/water connection is obtained in the name of the applicant. The applicant is not paying the electricity/water bill on behalf of the Licensee.
Held that— In respect of question no. 1, electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis are liable to GST.
In respect of question no.2, the Appellant cannot be considered as a Pure Agent.
In respect to question no. 3, as the facts of the case do not lead to or show or mention such a situation, therefore, a hypothetical question based on mere assumptions (without proper underlying facts) cannot be answered.