AAR directs on GST on power and water consumption

AAR directs on GST on power and water consumption

It rules on the charges collected from the recipients as per the meter reading

The Maharashtra Authority of Advance Ruling (AAR) has held that the Goods and Services Tax (GST) collected from the recipients on electricity and water charges, as per the meter reading, was actually on a reimbursement basis.

The applicant, Indiana Engineering Works (Bombay) had, in 2017, entered into a Leave and License Agreement with Capri Global Capital. The applicant licensed the fourth floor of Indiana House for use and occupation on an agreed license fee payable monthly with service tax or GST.

The applicant sought the advance ruling on the issue of whether electricity and water charges paid by it as per the meter reading and collected from the recipient, were liable to GST. And whether the appellant was to act as an agent.

The AAR noted that the main electricity and water meters were in the name of the applicant. The service was not acquired on the instructions of the tenant. Thus, the applicant did not act as an agent of the tenant. Also, even after the tenant was to leave the premises, the meters would remain in the name of the applicant.

The applicant contended that the reimbursement of expenses of electricity and water supply charges incurred by it was towards payment to the third party suppliers.

The Coram of Rajiv Magoo and T R Ramnani ruled that the main connections were in the applicant's name and he created sub-connections to know the actual consumption of electricity and water by the tenants.

The charges were apportioned/recovered from them as per the floor space occupied. These activities showed that the supplies were on the applicant's own account. Therefore, it was his responsibility to pay the supplying agencies.