TaxTMI 
TaxTMI 
2022 (11) TMI 259
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....spectively). The Applicant states that they execute government projects on tender basis and their main area of expertise is water supply and underground drainage works. The Applicant has been awarded contract for establishment of 1 x 12.5 MVA, 66/11kV Sub-station at B.V. Halli in Channapatna taluk, from Karnataka Power Transmission Corporation Limited (KPTCL for brevity). 3. The applicant has sought advance ruling in respect of the following questions:- i. Applicability of GST for reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of work. 4. Admissibility of the application: The question is about the "determination of the liability to pay tax on any goods or services or both" and hence is admissible under Section 97(2)(e) of the CGST Act 2017. 5. BRIEF FACTS OF THE CASE: The applicant furnishes some facts relevant to the issue: 5.1 The applicant states that they have been awarded contract for establishment of 1 x 12.5 MVA, 66/11kV Sub-station at B.V. Halli in Channapatna taluk, Ramanagara District and construction of 66kV SC tap line on DC towers for a distance of 18.4 kms from 66k....
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....s. The Applicant has been awarded contract for establishment of 1 x 12.5 MVA, 66/11kV Sub-station at B.V. Halli in Channapatna taluk, from Karnataka Power Transmission Corporation Limited (KPTCL for brevity). The Applicant wants to know the applicability of GST for reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of the work. 10. The Applicant states that reimbursement bills are raised to KPTCL by them for the compensation amount paid to farmers /land owners during execution of the project. The Applicant states that this compensation amount is not included in the contract amount (work order amount) and cheques are issued to beneficiary based on calculation and rates set forth by KPTCL in consultation with respective departments. On issue of these cheques and on realization of the amount in the beneficiary's account, the applicant raises a bill to KPTCL with necessary proofs and documents for reimbursement of the same. 11. The Applicant has also submitted brief note on the various compensations paid on behalf of KPTCL by them to the beneficiaries and the same is as below.- A) Land Co....
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....thorisation 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. 14. It could be seen from the above that a pure agent would be a person (supplier i.e. applicant....
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....n whose land the express feeder line passes and to any land within 9 meter vicinity on either side of the express feeder line since there should not be any trees, plants or structures within the 9 meter vicinity of the express feeder line as per norms. Where it is inevitable to cut the crops and trees during the course of execution of project, crop compensation and tree cut compensation is paid to the farmers. Thus the farmers or land owners are paid compensation either for cutting the trees or crops grown in their land or for not growing any trees or crops or to build any structures below the express feeder line. This is the service supplied by the farmers or land owners to the KPTCL and the same is covered under schedule II of CGST Act 2017 which is reproduced below: SCHEDULE II ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 1. ....................... 2. ....................... 3. ....................... 4. ....................... 5. Supply of services The following shall be treated as supply of services, namely: - A) ....................... B) ....................... ....