It was held by the Gujarat Authority of Advanced Ruling that GST which is applicable on electricity charges collected from the government is not covered under incidental expenses and therefore, would not be included in the value of supply.
The applicant had entered into a lease agreement with the President of India through the Commissioner of Central Excise, Audit-1, Ahmedabad. The agreement was to provide for a building on rent along with interior infrastructure on a monthly agreed rent.
The applicant had submitted that the CGST Department had been paying service tax on the total of the rent which was inclusive of electricity charges to the applicant till June 30, 2017.
The CGST Department then stopped paying the GST on electricity and incidental charges from July 1, 2017 stating that it is not in the terms under Rule 33 of CGST Rules of 2017.
The applicant approached the Advance Rulings for the issue that whether a landlord when charging electricity or incidental expenses in addition to the rent agreed on the lease agreement for the immovable property which is rented to the tenant, will be liable to pay and also recover GST from the tenant on electricity or incidental charges charged by it.
It was held that the electricity charges collected by the applicant would not be covered under the provisions of Section 15(2)(c) of CGST Act, 2017 and would not be included in the value of supply.
It was also held that the electricity charges collected by the landlord from the government of India based on sub-meter readings at actuals are covered under the amount recovered as a pure agent under Rule 33 of the CGST Rules, 2017, in respect to the Government of India (the lessor).