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The AAR, Maharashtra in the matter of M/s. Indiana Engineering Works (Bombay) Pvt. Ltd. [Advance Ruling No. GST-ARA-120/2019-20/B-114 dated December 16, 2021] held that, GST payable on electricity charges and water charges as per meter reading and collected from the recipients on actual reimbursement basis. Further, there is no authorization, obtained to act as pure agent and to make payment to third parties, therefore the assessee cannot be considered as a pure agent.
M/s. Indiana Engineering Works (Bombay) P. Ltd. (“the Applicant”) is the absolute owner of “Indiana House” and has entered into a Leave and License Agreements with M/s. Capri Global Capital Ltd (“the Licensee”), the Applicant has licensed its office premises to the Licensee for use and occupation of the leased premises on an agreed license fee payable monthly with Service tax/GST, that includes access to the respective common areas. In addition to the giving of the immovable property on lease, the Applicant is also providing utilities, such as electricity, water and internal maintenance in respect of the licensed premises and the charges are recovered from the Licensee based on the reading shown in the electricity/water meters provided by the Applicant.
The Applicant contended that, reimbursement of water charges, electricity charges, is nothing but repayment of certain expenses incurred by the Applicant on behalf of the Licensee and they do not have character of supply as defined under the Central Goods and Services Tax Act, 2017 (“CGST Act”). Further, the reimbursement of expenses received by them from the Licensee can qualify towards expenses incurred as a 'Pure Agent' and would not be considered in the value of supply for the levy of tax.
The AAR, Maharashtra in Advance Ruling No. GST-ARA-120/2019-20/B-114 dated December 16, 2021 held as under:
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