No GST for Reimbursement of Tree Cut Compensation paid

Karnataka AAR Ruling: No GST for Reimbursement of Tree Cut Compensation paid to Landowners & Farmers during Execution of Work:

• Decision has been made by AAR Ruling that No GST for reimbursement of the tree cut compensation amount was paid to farmers and land owners during the execution of work : Karnataka Authority for Advance Ruling
• Sree Subha Sales (The Applicant) is a Partnership concern registered under the provisions of the Karnataka GST Act as well as CGST.
• Water supply and underground drainage works are their primary areas of expertise, according to the applicant (Sree Subha Sales), who claimed that they carry out government projects via competitive bidding.
• In regards to the following query on the applicability of Goods and Services for reimbursement of a tree cut compensation Paid to Farmers & Land Owners During the Execution of Work, the Applicant (Sree Subha Sales) has obtained an advance ruling.
• The applicant claimed that their primary area of competence is water supply and underground drainage works and that they carry out government projects via competitive bidding.
• The KPTCL has given the applicant the contract for the construction of a substation.
• According to the applicant, this compensation amount is not a part of the contract money (work order amount), and beneficiaries get cheques based on calculations and rates established by Karnataka Power Transmission Corporation Limited in consultation with the relevant department.
• The applicant raises a bill to Karnataka Power Transmission Corporation Limited for reimbursement of the same upon the issuance of these checks and upon realisation of the same in the beneficiary’s account.
• Reimbursement of tree cut compensation amounts paid to farmers during the course of work execution is not chargeable to GST because the Applicant is eligible to be a Pure Agent, as according AAA Bench’s decision.

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