2026-VIL-205-AAR
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SGST Advance Ruling Authority

GST – Telangana AAR - Reimbursement of Electricity and Water Charges to Lessor - Pure Agent under Rule 33 of CGST Rules, 2017 - The Applicant, engaged in operating restaurants and coffee cafes, took commercial premises on lease and was contractually required, besides rent, to bear the electricity and water charges for actual consumption determined from separate meters and recovered by the lessor on production of supporting bills - Whether the reimbursement of electricity and water charges paid to the lessor is liable to GST or is excludable from the value of taxable supply under Rule 33 of the CGST Rules, 2017 - HELD - Electrical energy and water are exempt under the exemption notification without any conditions. Rule 33 excludes from the value of supply the expenditure or costs incurred by a supplier as a pure agent of the recipient, if the supplier makes payment to a third party on authorisation by the recipient, the payment is separately indicated in the invoice, and the supplies procured are in addition to the services supplied on own account - Where electricity is supplied bundled with renting of immovable property, it forms part of a composite supply taxed at the rate of the principal supply, even if billed separately. However, where electricity is supplied by a real estate owner as a pure agent, it does not form part of the value of the owner's supply, and a person charging the same amount for electricity as charged by the electricity supplier is deemed to act as a pure agent - The Applicant is eligible to exclude the electricity charges paid to the lessor from the value of taxable supply if the lessor acts as a pure agent, indicates the charges in the invoice and collects them only on actual basis without any surplus or deficit. The same ruling applies to water charges covered in Sl.No.99 of notification No.2/2017, dated. 28.06.2017 – Ordered accordingly - Qualification of Recovery as Pure Agent Expenditure - Whether the recovery of electricity and water charges by the lessor, strictly in terms of the Lease Agreement and without any markup or profit element, qualifies as expenditure incurred by a pure agent under Rule 33 - HELD - The question raised is not under the purview of the Authority - No ruling is given on the question.
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