AI Drafter 
TaxTMI 
TaxTMI 
2022 (2) TMI 827
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....having its registered office at Guniyal Gaon, P.O.: Sinola, Dehradun - 248009, Uttarakhand (herein after referred to as the "applicant"), a registered Public Limited Company under Companies Act, and registered with GSTIN- 05AAGCS4077C1ZAJ under the CGST Act, 2017 read with the provisions of the UGGST Act, 2017 (hereinafter referred to as the applicant'). 2. (i) The applicant has developed a residential community providing services of residential apartments, maintenance and other common facilities to the residents of senior living community by entering into a lease agreement and the maintenance and facilities agreement and collects maintenance and facilities (herein after referred to as the "Antara Comprehensive Benefit? or "ACB") charges on recurring basis from the residents under the following heads. 1. ACB Charges- ACB contributions from its residents is calculated on the basis of certain apportion of yearly proposed budget of expenses of super built area by the number of residents. 2. Asset Replacement Deposits Following goods and services are collected under Antara Comprehensive Benefits: 1. Safety & Security Services 2. Operation & Maintenance....
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....such deposit are separately maintained and separate debit notes are raised to the residents. These deposits would be used for the said purpose and not towards regular Antara Comprehensive Benefits. In view of the above facts the applicant has sought advance ruling on the following questions: 1. Whether the electricity charges paid to UPCL for the power consumed by residents in their residential apartments and recovered from them on actual cost basis liable to GST? 2. Whether the electricity charges paid to UPCL (Electricity supply authority) for the power consumed towards common area and recovered from residents on actual cost basis are liable to GST? 3. Whether Asset Replacement Deposits collected from residents are liable to GST? 3. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions; therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act. 4. The Advance Ruling under GST means a decision provided by the authority or the appellate authorit....
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.... residential apartments and qualify as composite supply, therefore, liable to GST. 8. We find that the applicant is a registered Public Limited Company under Companies Act, and registered with GSTIN- 05AAGCS4077C113 in Uttarakhand at Guniyal Gatut, P.O. -Sinola, Dehradun 248009, Uttarakhand and in their application dated 17.08.2021 and written submission dated 04.10.2021, the applicant submitted that: i) They are liable to pay electricity charges to UPCL for the power consumed by the residents and common area shared by the residents and the applicant for which they receives the invoices of electricity charges with no GST levied on it, as the electricity charges are exempt vide Notification No. 12/2017 Central Tax (Rate), dated June 28, 2017. And that they are involved in purely passing through of the electricity charges charged by the UPCL to the residents proportionately under the following heads: - 1. Utility residential charges (recovered from residents) 2. Common Area Electricity Charges (i) ACB Common Area Electricity Charges (recovered from residents) (ii) Non-ACB Common Electricity Charges (treated as expenses of Antara) ....
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....pply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account, Explanation.- For the purposes of this rule, the expression -pure agent means a person who- (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account" 10.2. From the above it is seen that a pu....
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.... a) services forming part of fixed monthly plan as specified in "Schedule 2" ('Antara Comprehensive Benefit or ACB'); and b) Additional services as described in Clause 1.4 below ('Additional Services'). These Additional Services can be chosen by the Lessee at any time in accordance with the terms hereof" From the above it is apparent and abundantly clear that the said agreement has been entered into, for rendering of services of- a) Antara Comprehensive Benefit or ACB: and Additional services, to the Lessee(s) in consideration of payment of service charges. b) The term "Additional Services" has been defined as "1.4 Additional Services: The Additional Services can be opted by the Lessee(s) as per their preference or convenience keeping in view the schedule notified by the Lessor from time to time. The Additional Services shall comprise the optional services which shall be: charged on a pay per use basis at rates specified by the Lessor. The Lessee(s) shall give: reasonable notice to the Lessor for availing the optional services to enable the Lessor to organize the same. The charges payable for Additional ....
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....ed to u Apartment by the Lessee(s) beyond ordinary wear and tear." Further, "Service Charges" has been defined as "service charges shall mean all charges payable, either on a periodical or on a usage basis, by the Lessee(s) to the Lessor for the operation and maintenance of the community and shall include the ACB Charge, Additional Service Charges or any other charges for being provided with the service in terms of this Maintenance and Facilities Agreement and /or the Community Rule". 12. From the above lease deed and maintenance and facilities agreement, we have no doubt in coming to the conclusion that the services offered by the applicant is a wholesome and combined package of services, which cannot be performed without the supply of electricity (water also), to the infrastructure, which in an integral part of the "Community'. And once an Lessee, there is no option available for himself or herself, to disassociate him or her, from the ambit of the services so provided by the Lessor and opt only for paying electricity charges (and for that matter water charges if applicable) on actual consumption basis, without availing any other services, as the Lessee has no ....
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....the Community, cannot opt out of the agreement to opt for direct supply of electricity/water by any other agency, without using the infrastructure developed by the applicant. 14.3. In case of disruption of supply of electricity by the state electricity Board, many of the infrastructure, would come to a halt and to overcome this, a generator set is used as a contingency plan. This fact is established from the "Bill of Supply" raised by the applicant to its resident, wherein "Diesel Consumption Charges" (under SAC Code - 996929) has been charged and the electricity generated has been consumed by the Lessor i.e. the service recipient. Such supply of electricity generated by the applicant using generator set and likewise electricity received from the Electricity Board, is supplied to the residents/end users, using the infrastructure for which the applicant charges the same under various heads viz. Antara Comprehensive Benefits (ACB) Charges, Utility residential charges (recovered from residents), Common Area Electricity Charges, ACB Common Area Electricity Charges (recovered from residents), Non-ACB Common Electricity Charges (treated as expenses of Antara). 15. We find that the ....
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.... procured from State Electricity Board and also water to perform the maintenance services and other facilities to the Lessee/ service recipients (the owner/occupant resident of the Community). 16.2. We find that although the applicant has claimed himself as "pure agent" but on scrutiny of the "LEASE DEED' and "MIANTENANCE & FACILITIES AGREEMENT" it becomes abundantly clear that the infrastructure developed by them is fully dependent on the electricity (and for that matter water also) and in turn the services of MIANTENANCE & FACILITIES so offered to the Community is absolutely dependent on the electricity (and water also). Take out the components of electricity (water also), many of the infrastructure (Lifts, Pool, Hydrotherapy Pool, Theatre to name few) and consequent services of MIANTENANCE & FACILITIES [made functional and operated with the electricity only (water also)], so offered, the owner/occupant resident of the Community [the service receiver], becomes infructuous and redundant. This means to say that to provide services of maintenance, under the MIANTENANCE & FACILITIES AGREEMENT, the applicant is using electricity supplied by the UPCL (Electricity supply authorit....
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.... authority). This goes on to prove that they are dependent on electricity procured by them from the UPCL (Electricity supply authority) and hence have their vested interest in the supply of electricity by the said entity. Further, the lease agreement and the maintenance and facilities agreement executed and entered beforehand between the service provider and receiver, does neither gives any option to the buyer of opting out of such maintenance and other common facilities nor there is any mention of any pure agent service in this regard. This fact is affirmed from the Par 7.2 of the `MIANTENANCE & FACILITIES AGREEMENT', which inter-alia says "7.2 Obligation to pay Service Charges: The Lessee(s) acknowledge that the utilization of the Services is essential to the Lessee(s) and integral to the proper functioning of the Community and that the Lessor has invested considerable resources in providing the Services to the residents of the Community. Therefore, the Lessee(s) agree that the ACB Charge and the Additional Services Charge will not be altered or affected in the event the Lessee(s) do pot utilize any services under Antara Comprehensive Benefit or opted Additional Services and ....
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....o tax at appropriate rates. Hence this value of electricity charges separately shown in the invoices is to be added to the considerations shown towards the same service of upkeep and maintenance charged to individual members and then the consideration for the supply of such service is to be arrived and the taxable value shall be determined." 19. Having decided firsts two issues, we now proceed to examine, whether the amounts collected by the applicant towards Asset Replacement Deposits, would form part of consideration towards the services being provided by them or not. In this regard we invite reference to Section 2(31) of the CGST Act, 2017, which defines the term "consideration". For clear perspective, the same is reproduced as under: "(31) of goods or services or both includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect ....
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....he front/open but in the hindsight necessarily. Like in the instant case, as admitted, these deposits are in accordance with the agreement and are directly proportional to the super area and are to meet any planned or unplanned capital outlay in future, which is clearly a consideration to meet any contingency, which may arose in future and hence there is no iota of doubt regarding the true picture of such deposits. Coining and using any other term to camouflage such deposits, would not take away its basic characteristics of "consideration". 20.5. From the above it is very clear that these deposits are to be charged from the residents/ owners for undertaking /execution of any services in future (planned or unplanned). And since these deposits are for services to be executed in future, they would be non-refundable in nature and would depend upon the super area taken on lease by the service recipient/ resident/owner and by all means this is an advance sought for by the applicant for future supply of services. The basis for calculating these amounts is directly proportional to the super area taken on lease, as per the lease deed executed between them, is indicative of fact that the ....