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GST on electricity and water charges which are being collected at actual by the Lessor from the Lessee. Since there is no uniform opinion arrived by the Members of the Authority for Advance Ruling in respect of Questions raised by applicant, the issue is being referred to the Appellate Authority for Advance Ruling.

Levy of GST— In the instant case, the applicant is seeking Advance Ruling on the following as under :

1. Whether GST is applicable on electricity and water charges which are being collected at actual by the Lessor from the Lessee?

2. If answer to Q.No.1 is yes, then what is the nature of supply and applicable rate of GST?

The opinion expressed by Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax), on the issues raised by the applicant.

Notification No. 02/2017 dated: 28.06.2017 provides for exemption from tax under CGST Act, 2017 on water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized and water sold in sealed containers) at Serial No. 99 under Chapter heading ‘2201’. Similarly this notification also exempts electrical energy from tax under CGST Act, 2017 by enumerating the same in Serial No. 104 with Chapter heading ‘2716 00 00’.

Accordingly GST is not applicable on electricity and water charges which are being collected at actual by the Lessor from the Lessee.

The opinion expressed by Sri B. Raghu Kiran, Additional Commissioner, Central Tax on the issues raised by the applicant are as given below.

As per the terms of the agreement, the applicant is supplying a bunch of services in which supplies of leasing is primary supply and supply of electricity and water are Incidental. Thus, espousing the afore-said concept of composite supply to the facts of the present case, it can be decided that leasing of premises would be the main supply and provision of utilities such as electricity and water would be in the nature of incidental/ancillary supplies which are essential in enjoyment of the main supply.

Further, in terms of Sec. 8 of the CGST Act, 2017, the tax liability on a composite supply comprising two or more supplies, one of which is a principal supply shall be treated as a supply of such principal supply. Accordingly, in the instant case, GST is applicable on supply of electricity and water charges and the rate applicable to supply of leasing services is applicable to the supply of these utilities.

Held that— Since there is no uniform opinion arrived by the Members of the Authority for Advance Ruling in respect of Questions raised by applicant representing Central Tax and State Tax and they have expressed two different views on the issue raised by the applicant on the applicability of GST on electricity and water charges which are being collected at actual by the Lessor from the Lessee.

The application is being referred to the Appellate Authority for Advance Ruling for the state of Telangana in terms of section 98(5) of the CGST/TGST Act, 2017 for hearing and decision on the questions on which advance ruling is sought.