Collection of Utility Charges shall attract GST taxed as Composite Supply


  • Applicant is engaged in business of exhibition and business services, accommodation in hotels, inn, guest house, club or camp site etc. services, and restaurant services.
  • Agreement between lessor (applicant) and lessee is solely for the purpose of renting of immovable property against payment of rent.
  • Apart from rent, utility charges, like electricity expenses, water charges, property tax and cooking fuel, are collected by lessor from lessee.
  • Applicant is of the view that reimbursements are not liable to GST if same are incurred in capacity of ‘pure agent’.

Applicant seeks Advance Ruling on following two issues:

  • Whether GST is levied on reimbursement of expenses from lessee by lessor at actual?
  • In case GST is levied, what is rate of GST applicable on said reimbursement of expenses?

Held that:

  • From terms of agreement and transaction, it is found that there is no authorization, obtained by applicant from recipient of the services, to act as pure agent and to make payment to third parties. Thus, applicant has failed to establish itself as a pure agent and subsequent reimbursement thereof cannot be excluded from value of supply.


  • GST is levied on reimbursement of expenses from lessee by lessor at actuals.
  • As reimbursement of expenses constitute composite supply GST would be payable at a rate as applicable to principal supply.