Page 28 - GSTL_26th March 2020_Vol 34_Part 4

J124 GST LAW TIMES [ Vol. 34

ELECTRICITY SUPPLIED AS PER LEASE
AGREEMENT — LEVY OF GST
By
CA Raman Venkat
SENIOR MANAGER - INDIRECT TAXES - WIPRO LTD.

Preamble
The discussions in this article is on Haryana AAR
Ruling in the case of Keysight Technologies International
India Pvt. Ltd. reported in 2020 (32) G.S.T.L. 126 (A.A.R. -
GST - Haryana). The applicant who is in the business of export of software has
sought advance ruling from the Authority on the issue regarding levy of GST on
electricity supplied by the owner of the premises rented out to the applicant.
Facts of the case
The applicant is 100% EOU engaging in export of software and IT ena-
bled services out of India. The appellant has taken out premises from landlord on
lease rental basis. The landlord is also obligated to provide services mostly con-
nected to common area viz. facility management, technical services, landscaping,
window cleaning, parking lot maintenance, etc.
Under the said agreement, landlord has also agreed to supply electricity
to the applicant and applicant has agreed to pay based on number of electrical
units supplied as indicated by the meters installed for the leased premises.
The agreement of the applicant with the landlord envisages supply of
electricity from grid as well as captive DG sets. For the electricity supplied from
grid, the applicant is liable to pay such charges as may be determined by the dis-
tribution Agency.
As far as the charges for electricity consumption supplied through DG
sets is concerned, the agreement provides for payment at such charges per unit
as may be determined on monthly basis by dividing the cost of actual diesel con-
sumed by the number of units generated by the DG set.
Interpretation of law
The Hon’ble AAR correctly concluded that ‘electricity’ is goods and ex-
empted vide Entry No. 104 in Notification No. 2/2017-C.T. (Rate), dated 28th
June, 2017, issued for rate of tax for goods.
The Authority could have concluded the whole issue based on exemp-
tion provided in aforesaid notification. However, in the succeeding paragraphs,
the Hon’ble AAR started narrating a question whether electricity supplied
through DG sets is a goods or service. This question was not at all there in the
plea of the appellant.
The Hon’ble AAR ruled that the benefit of exemption available to elec-
tricity under Entry No. 104 in Notification No. 2/2017-C.T. (Rate), dated 28th
June, 2017, is not available to electricity supplied under the lease agreement on
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