PURE AGENT CLAIM REJECTED- GST PAYABLE ON TENANT ELECTRICITY RECOVERIES: RAJASTHAN AAAR

PURE AGENT CLAIM REJECTED- GST PAYABLE ON TENANT ELECTRICITY RECOVERIES: RAJASTHAN AAAR

RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX

Case Title: M/s Harish Chand Modi, Sardarpura, Jodhpur

(GST AAAR RAJASTHAN)

Appeal No.: RAJ/AAAR/APP/05/2021-22

Order No.: RAJ/AAAR/05/2021-22

Advance Ruling No. RAJ/ AAR/2021- 22/19 dated 21.09.2021

Date of Judgement/Order: 17th January 2022

BRIEF FACTS-

Para No. 2  The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as ‘the CGST Act’) read with Section 100 of the Rajasthan GST Act, 2017(hereinafter also referred to as ‘the RGST Act’) by M/s Harish Chand Modi, Sardarpura, Jodhpur (hereinafter also referred to as ‘the appellant’) against the Advance Ruling NO.RAJ/AAR/2021-22/19 dated 21.09.2021. 

Para No 3.5– The appellant has filed application before Advance Ruling Authority to sought ruling whether reimbursement of electricity expenses, by the lessee to lesser (appellant) would form part of taxable value?

IMPORTANT PARAGRAPHS-

Para No 6.3.1– Authority for Advance ruling has observed that in the instant case there is no clear authorization made by the lessee on which the supplier (lessor) acts as a pure agent of the recipient of the supply, when he makes the payment to the third party. The rent agreement itself not become an authorization as nowhere in the said agreement has the ‘reimbursement’ term been mentioned. Further applicant (lessor) does not enter into a contractual agreement with the recipient (Lessee) of supply to act as pure agent to incur expenditure or costs in the course of supply services. Hence, the act of working as a ‘pure agent’ has not been phrased out. Thus, reimbursement of electricity expenses had not been made on actual basis, by the lessee to lesser as it had been collected in advance with rent and further adjusted by raising the invoice/bill/memo/document by the lessor. Therefore, in the instant case, the so called reimbursement of electricity expenses would form part of taxable value in term of clause (c) subsection (2) of section 15 of the CGST Act, 2017. 

Para No. 6.3.4  Accordingly, we hold that appellant is not working as pure agent.

Para No 6.4.- The appellant has stressed upon Ruling given by the Authority for Advance Ruling Gujarat in the case of Mis Gujarat Narmada Valley Fertilizers & Chemicals Limited. In this regard, we are of the opinion that these orders have not been passed by the higher forum than the present one; therefore, the same are not
being considered.