2019 (12) TMI 166 - AAR - GST

GST Liability on Electricity Charges: Application Rejected by Authority for Advance Ruling

The application seeking a ruling on the liability to pay GST on electricity charges and the Licensor's ability to collect GST on these charges was ... Advance ruling - Jurisdiction of Authority for Advance Ruling - Leasing of immovable property as supply of service - Reimbursement and charging of electricity charges - Applicability of GST on components charged by a lessorAdvance ruling - Jurisdiction of Authority for Advance Ruling - Reimbursement and charging of electricity charges - Applicability of GST on components charged by a lessor - Application seeking advance ruling on liability to pay GST on electricity charges and on the licensor's collection of GST on those charges was not entertainable by the Authority. - HELD THAT: - The Applicant sought a ruling whether it is liable to pay GST on electricity charges and whether the Licensor can collect GST thereon. The Authority examined the scope of an advance ruling, as defined under the GST Act, and found that the question raised related to the components of amounts charged by the Licensor in relation to the lease (rent, maintenance, utilities and electricity) rather than to any supply made or proposed to be made by the Applicant. Because the matter concerns the composition of charges levied by the lessor and not the Applicant's own supplies, it falls outside the matters on which this Authority may pronounce an advance ruling under the statutory scheme. Consequently the Authority does not have the competence to decide the question, and the application must be rejected in terms of the statutory provision permitting refusal where the subject-matter is not within the Authority's jurisdiction. [Paras 5, 6]Application rejected as not amenable to advance ruling by the Authority; order passed under the relevant provision permitting refusal for lack of jurisdiction.Final Conclusion: The Authority declined to entertain the request for an advance ruling on GST liability and collection in respect of electricity charges levied by the licensor, and rejected the application under the statutory provision permitting refusal where the question is not within the Authority's competence. Issues Involved:1. Liability to pay GST on electricity charges.2. The ability of the Licensor to collect GST from the Applicant on electricity charges.Analysis:Issue 1: Liability to pay GST on electricity chargesThe Applicant sought a ruling on whether they are liable to pay GST on electricity charges and whether the Licensor can collect GST from them on these charges. The agreement between the Applicant and the Licensor required the Applicant to reimburse the electricity charges consumed at actuals. However, the Licensor also charged GST on the electricity charges, claiming to be supplying electricity to the Applicant. The Authority for Advance Ruling examined this issue in the context of the GST Act.Issue 2: Licensor's ability to collect GST from the Applicant on electricity chargesThe Authority for Advance Ruling pointed out that the Applicant's question regarding the components of the amount charged by the Licensor, as the supplier of the service of leasing immovable property, did not directly relate to the supplies made or intended to be made by the Applicant. As per the provisions of the GST Act, an advance ruling pertains to matters or questions specified in the Act in relation to the supply of goods or services undertaken or proposed by the Applicant. Therefore, the Authority concluded that it could not provide a decision to the Applicant in the form of an advance ruling on this matter.In conclusion, the application seeking a ruling on the liability to pay GST on electricity charges and the Licensor's ability to collect GST on these charges was rejected by the Authority for Advance Ruling in accordance with section 98(2) of the GST Act. The decision was based on the understanding that the components of the amount charged by the Licensor did not directly pertain to the supplies made or intended to be made by the Applicant, falling outside the scope of an advance ruling by the Authority.