GST on Electricity charges

[Kaustubh Karandikar]

XYZ is a commercial Cooperative Society & has one electricity connection and hence one bill from BEST for the whole building. Individual members having sub meters only to assess their reading. Every month society is taking the actual reading from members sub meter for actual consumption of the electricity. Based on the same, electricity charges are recovered from the members. Is XYZ liable to pay GST on the electricity charges recovered from members even though it is only a reimbursement?

[KASTURI SETHI]

Dear Sir,

There are contradictory decisions of two AARs. One in favour of the Govt. and the other in favour of the assessee. You must be well aware of both. Hence no need to discuss both the decisions. However, in my view such electricity charges recovered from the members of society are not taxable. This cannot conform to the definition of 'supply' under CGST Act. The Society is not generating its power but distributing the electricity received from the BEST and this supply is already tax paid. Moreover, such activity is of the nature of a pure agent. It is also presumed that installation of sub-meters has suffered tax. Hence no GST is leviable.

In this context, also go through the Board's Flyer No. 42 dated 5.9.19

[Rajendra Prasad]

Dear Sir

Please clarify the following points also

1. The tenants are not the members of the Society who are actually using the power.

2. The Society is collecting Power Charges slightly higher than the actual bill to recover common power charges .

AI Summary

GST on electricity recovery: reimbursements by a society may be non supply when acting as a pure agent, subject to conditions. Recoveries by a cooperative society of electricity charges apportioned from a single billed supply are argued not to constitute supply where the society only distributes an already taxed supply and functions as a pure agent; sub meter installation is assumed to have suffered tax, and the position is informed by conflicting advance rulings and Board Flyer No. 42.