ARORA PREM AND ASSOCIATESReimbursement of water & electricity charges by tenants are includible in value of supply: AAR-Mahashtra
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Reimbursement of water & electricity charges by tenants are includible in value of supply: AAR-Mahashtra
| Reimbursement of water & electricity charges by tenants are includible in value of supply: AAR |
The applicant was an absolute owner of a building. It entered into a lease and license agreements with tenants. It filed an application for advance ruling to determine whether electricity charges and water charges paid by it as per meter reading and collected from the recipients at actual on reimbursement basis would be liable to GST.
| The Authority for Advance Ruling observed that electricity and water supply are basic amenities without which Competent Authority will not issue occupancy certificate for conducting commercial activities. The amount of electricity and water charges paid at actuals by licensee would be for effective enjoyment of rented premises. Without provision of utility services like water, electricity etc., licensee can’t run business and amount collected towards electricity/water charges would be part of consideration received in relation to renting of immovable property. Therefore, it was held that the charges for electricity and water recovered as reimbursements would be in nature of incidental expenses in relation to renting of immovable property. Such charges reimbursed by tenants shall be includible in value of supply and would be considered as transaction value for purpose of levy of tax. |
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