GST on Power Backup Charges at Residential Society

[ROHIT GOEL]

Dear experts

ABC Builders has developed a built up residential society. In order to ensure regular supply of electricity to the residents, Builder has installed GENSETS via which power backup is provided. Sub meters have been installed at each house and at month end Rs. 20/unit is being recovered on each unit of electricity consumed by the residents.

As per NN 02/2017-CT(Rate), Electrical energy being a good is exempt from GST. However, certain AARs have ruled that in this case, builder is providing facility management service and not electricity supply and therefore GST is applicable at 18%.

I hereby seek your valuable opinion on this issue.

AI Summary

Dispute Over GST on Generator Power Charges: Experts Debate Classification as Electricity or Facility Management Service A residential society developed by ABC Builders provides power backup through generators, charging residents Rs. 20 per unit for electricity. While electrical energy is generally exempt from GST, some authorities have ruled that the builder's service constitutes facility management, thus attracting an 18% GST. One expert argues that GST should not apply to electricity charges but should apply to facility management services, advising proper documentation to demonstrate that electricity supply is separate. Another expert states that the builder does not qualify for exemptions under specific notifications, as it is not an electricity utility.