Applicant: M/s. Sree Subha Sales
AAR No. KAR ADRG 39/2022
Authority: Karnataka Authority for Advance Ruling Goods and Services Tax
Order passed on: 27.10.2022
The Applicant herein is a partnership concern and has GST registration in Karnataka and is engaged in execution of government projects on tender basis and mainly focuses on water supply and underground water drainage works.
The question in application was regarding applicability of GST on reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of work.
Judgment: After hearing the applicant and going through the contract submitted by the Applicant, the Authority proceeds to examine whether the applicant qualifies to be a pure agent or not as per Rule 33 of CGST Rules, 2017.
The applicant satisfies all 4 conditions to be a pure agent only to the extent of reimbursement of tree cut compensation. The applicant is not acting as pure agent to the extent of reimbursement of land compensation as special conditions of contract does not mention land compensation.
Therefore, reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of work doesn’t amounts to GST if the applicant qualifies to be a pure agent.
The complete order can be downloaded from this link: https://gstcouncil.gov.in/sites/default/files/AAR-Dynamic/Sree_subha_sales[1].pdf
