The Haryana Authority for Advance Rulings (AAR) ruled that water supply activities done by the developer for residential house attracts 18 % GST.
M/S Amarnath Aggarwal, the applicant is a Pvt ltd company developer and developing residential complexes which include, plots, commercial shops, and group housing flats. The applicant is doing various activities under this GST registration and is collecting GST as applicable from the customers and depositing the same with the department after adjusting the input tax credit available.
The applicant has laid water supply pipelines, overhead tanks, tube wells and water treatment yards in the complexes. The underground water is lifted through Tubewell to the Treatment yard and after treatment, the water is again lifted to the overhead tank through motor pumps and then supplied the same to the residents through pipelines.
The water reading meters have been installed for individual residents. The consumption of water reading is taken periodically and the intimation of consumption of water is informed to the consumers at the prescribed rate. The invoice cum Receipt is issued to the customers at the time of payment along with GST.
A two-member bench comprising Sunder Lal and Kamud Singh observed that the activity of the water distribution system by the applicant to the residents of the Complex is covered under the definition of business and is a taxable supply.
The relevant entry no. 3 of Pure Services in the exemption notification dated got amended on 18.11.2021 w.e.f 01.01.2022 is as Pure Services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity about any function entrusted to a Panchayat under Article 243 G of the Constitution or about any function entrusted to a Municipality under Article 243W of the Constitution.
It was concluded that for any supply to be covered under the Pure Services that there should be no supply of goods, the recipient should be Central government/State government/Union territory/ Local Authority and services should be by way of any activity about any function entrusted to a panchayat under article 243G of the constitution or about any function entrusted to a Municipality under Article 243 W of the Constitution. Exclusion in this entry is already mentioned.
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