Circular No.: 206/18/2023-GST
Date of Circular: 31st October 2023
Relevant Sections and Rules:
- CGST Act, 2017:
- Section 9: Levy of GST
- Section 15: Valuation
- Schedule I – Entry 2: Supplies between related persons without consideration
- Section 168(1): Power to issue instructions
- IGST Act, 2017:
- Section 5: Levy of integrated tax
- Relevant Notifications:
- Notification No. 11/2017-CT (Rate) dated 28.06.2017
- Notification No. 12/2017-CT (Rate) dated 28.06.2017
Summary of Clarifications Provided:
- Definition of “Same Line of Business” – Leasing Excluded:
Input services eligible for 5% GST on transport or rental of passenger motor vehicles with fuel included (SAC 9964/9966) are restricted to those within the same line of business. The term does not include leasing of motor vehicles without operators (SAC 9973). Only transport of passengers and rental of vehicles with operator are considered in the same line of business. - GST on Reimbursement of Electricity Charges by Real Estate Operators:
Electricity supplied along with renting/maintenance is a composite supply with renting or maintenance as the principal supply. Hence, GST applies at the rate of the principal supply, even if electricity is billed separately.
Exception: If the entity charges electricity on actual basis and acts as a pure agent, it is excluded from taxable value, and no GST is charged on such reimbursement. - Job Work from Barley to Malted Barley Attracts 5% GST:
Conversion of barley to malt is classified as job work in relation to food products, covered under Chapters 1–22 of the Customs Tariff, and hence attracts 5% GST, even if the malt is used for alcoholic liquor production. The use of malt for beer does not alter its classification as a food product. - DMFTs Are Governmental Authorities and Eligible for GST Exemptions:
District Mineral Foundation Trusts (DMFTs), set up by State Governments to carry out public welfare activities in mining-affected areas, are considered governmental authorities. Accordingly, they are eligible for GST exemptions under the same criteria as other governmental authorities, since they provide services like drinking water, education, and healthcare free of cost. - Exemption for Horticulture Services to CPWD:
Pure services or composite supplies (goods value ≤25%) for horticulture works supplied to CPWD are exempt from GST under Sl. No. 3 and 3A of Notification No. 12/2017, since such services are in relation to functions of Panchayats/Municipalities as per Articles 243G and 243W of the Constitution.
Source: Circular No.: 206/18/2023-GST