Reimbursement of water & electricity charges by tenants are includible in value of supply: AAR

  • Blog|GST & Customs|News|
  • 128 Views
  • |
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 5 May, 2022

value of supply under gst

Case Details: Authority for Advance Rulings, Maharashtra Indiana Engineering Works (Bombay) (P.) Ltd., In re - [2022] 137 taxmann.com 389 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

    • Rajiv Magoo and T.R. Ramnani, Member

Facts of the Case

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.

AAR Held

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.

Case Review

List of Cases Referred to

    • E-Square Leisure (P.) Ltd., In re [2019] 104 taxmann.com 121 (AAR – Maharashtra) (para 2.13)
    • South Eastern Coalfields Ltd. v. CCE&ST 2019 (22) GSTL 393 (Tri. – Delhi) (para 2.15)
    • Kiran Gems (P.) Ltd. v. CCE & ST 2019 (25) GSTL 62 (Tri. Ahd) (para 2.15)
    • ICC Reality (India) (P.) Ltd. v. CCE 2013 (32) STR 427 (Tri – Mum.) (para 2.15).

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied