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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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Tags: AAR RulingCGST

4 years ago

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