GST on Electricity Charges - Reg

[kiran kumar]

Dear Sir,

We have Two type of business set up in same place of business. Recently we given one type of business for leasing.

We are receiving the Electricity bill for Entire two Business from APSEB and We are paying the monthly Bill through online.

For the same we have separate meters to identify the Electricity charges for each type of Business.

As per lease agreement Actual electrical charges based on Units consumption need to be collected from Leasing vendor.

We are raising the debit note to Leasing vendor with out GST

Please advise the GST compliance in this

Thanks&Regards,

Kiran Kumar

[KASTURI SETHI]

2019 (23) G.S.T.L. 514 (A.A.R. - GST) = 2019 (4) TMI 421 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

 

[Kashish Gupta]

If the agreement has a clause the supply of electricity is subject to payment of maintenance charges, then GST is to be levied as it is not an independent supply. The concept of composite supply would govern this taxation despite there is separate metre for electricity and charges are being recovered on actual basis.

However, if said charges are not recovered as a Part of maintenance service, but considering it as an independent supply, then GST shall not be charged since the full and unconditional exemption has been given [NN 02/2017-CT (Rate) dated 28.06.2017 - S.No. 104 refers]

[KASTURI SETHI]

The querist is neither engaged in the manufacture/generation of electricity nor supplying electricity.. He is paying electricity bill for and on behalf of tenant and thereafter get reimbursement. This is a case of reimbursement. Every case has different facts and circumstances.

AI Summary

Composite supply of electricity with maintenance attracts GST; independent recharge or reimbursement may be exempt under the cited notification. Recovery of electricity charges from a lessee may be GSTable if characterised as a composite supply linked to maintenance; if treated as an independent supply it may be covered by the cited full and unconditional exemption. If the landlord pays the supplier and merely recovers costs from the tenant, the transaction may be a reimbursement, with GST treatment depending on the contract terms and factual circumstances.