Circular No. 206/18/2023-GST
F. No. CBIC-190354/195/2023-TO (TRU-II)-CBEC
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
*****
North Block, New Delhi
Dated the 31
st
October, 2023
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals
(All)
Madam/Sir,
Subject: Clarifications regarding applicability of GST on certain services – reg.
Based on the recommendations of the GST Council in its 52
nd
meeting held on 7
th
October, 2023 ,at New Delhi, clarification, with reference to GST levy, related to the
following issues are being issued through this circular.
i. Whether ‘same line of business’ in case of passenger transport service and renting of
motor vehicles includes leasing of motor vehicles without operators.
ii. Whether GST is applicable on reimbursement of electricity charges received by real estate
companies, malls, airport operators etc. from their lessees/occupants.
iii. Whether job work for processing of “Barley” into “Malted Barley” attracts GST @ 5% as
applicable to "job work in relation to food and food products” or 18% as applicable on
“job work in relation to manufacture of alcoholic liquor for human consumption”.
iv. Whether District Mineral Foundations Trusts (DMFTs) set up by the State Governments
are Governmental Authorities and thus eligible for the same exemptions from GST as
available to any other Governmental Authority.
v. Whether supply of pure services and composite supplies by way of
horticulture/horticulture works (where the value of goods constitutes not more than 25 per
cent of the total value of supply) made to CPWD are eligible for exemption from GST
under Sr. No. 3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
2. Whether ‘same line of business’ in case of passenger transport service and renting
of motor vehicles includes leasing of motor vehicles without operators.
2.1 Services of transport of passengers by any motor vehicle (SAC 9964) and renting of
motor vehicle designed to carry passengers with operator (SAC 9966), where the cost of fuel is
included in the consideration charged from the service recipient attract GST at the rate of 5%
with input tax credit of services in the same line of business.
2.2 Same line of business as stated in the notification No. 11/2017- Central Tax (Rate) means
“service procured from another service provider of transporting passengers in a motor vehicle
or renting of a motor vehicle”.
2.3 It is hereby clarified that input services in the same line of business include transport of
passengers (SAC 9964) or renting of motor vehicle with operator (SAC 9966) and not leasing of
motor vehicles without operator (SAC 9973) which attracts GST and/or compensation cess at the
same rate as supply of motor vehicles by way of sale.
3. Whether GST is applicable on reimbursement of electricity charges received by real
estate companies, malls, airport operators etc. from their lessees/occupants.
3.1 Doubts were raised on the applicability of GST on supply of electricity by the real estate
companies, malls, airport operators etc., to their lessees or occupants.
3.2 It is clarified that whenever electricity is being supplied bundled with renting of
immovable property and/or maintenance of premises, as the case may be, it forms a part of
composite supply and shall be taxed accordingly. The principal supply is renting of immovable
property and/or maintenance of premise, as the case may be, and the supply of electricity is an
ancillary supply as the case may be. Even if electricity is billed separately, the supplies will
constitute a composite supply and therefore, the rate of the principal supply i.e., GST rate on
renting of immovable property and/or maintenance of premise, as the case may be, would be
applicable.
3.3 However, where the electricity is supplied by the Real Estate Owners, Resident Welfare
Associations (RWAs), Real Estate Developers etc., as a pure agent, it will not form part of value
of their supply. Further, where they charge for electricity on actual basis that is, they charge the
same amount for electricity from their lessees or occupants as charged by the State Electricity
Boards or DISCOMs from them, they will be deemed to be acting as pure agent for this supply.
4. Whether job work for processing of “Barley” into “Malted Barley” attracts GST @
5% as applicable to "job work in relation to food and food products” or 18% as applicable
on “job work in relation to manufacture of alcoholic liquor for human consumption”.
4.1 References have been received to clarify whether services by way of job work for
conversion of barley into malt attracts GST at 5% prescribed for "job work in relation to all food
and food products falling under Chapter 1 to 22 of the customs tariff" or at the rate of 18%
prescribed for "services by way of job work in relation to manufacture of alcoholic liquor for
human consumption”.
4.2 Malt is a food product. It can be directly consumed as part of food preparations or can be
used as an ingredient in food products and also used for manufacture of beer and alcoholic liquor
for human consumption. However, irrespective of end-use, conversion of barley into malt
amounts to job work in relation to food products.
4.3 It is hereby clarified that job work services in relation to manufacture of malt are covered
by the entry at Sl. No. 26 (i) (f) which covers “job work in relation to all food and food products
falling under chapters 1 to 22 of the customs tariff” irrespective of the end use of that malt and
attracts 5% GST.
5. Whether District Mineral Foundations Trusts (DMFTs) set up by the State
Governments are Governmental Authorities and thus eligible for the same exemptions
from GST as available to any other Governmental Authority.
5.1 DMFTs work for the interest and benefit of persons and areas affected by mining related
operations by regulating receipt and expenditure from the respective Mineral Development
Funds created in the concerned district. They provide services related to drinking water supply,
environment protection, health care facilities, education, welfare of women and children, supply
of medical equipment etc.
5.2 These activities are similar to activities that are enlisted in Eleventh Schedule and
Twelfth Schedule of the Constitution. The ultimate users of the various schemes under DMF are
individuals, families, women and children, farmers/producer groups, SHGs of the mining
affected areas etc. The services/supplies out of DMF fund are provided free of charge and no
consideration is realized from the beneficiaries by DMF against such services.
5.3 Accordingly, it is clarified that DMFT set up by the State Governments are Governmental
Authorities and thus eligible for the same exemptions from GST as available to any other
Governmental Authority.
6. Whether supply of pure services and composite supplies by way of
horticulture/horticulture works (where the value of goods constitutes not more than 25 per
cent of the total value of supply) made to CPWD are eligible for exemption from GST
under Sr. No. 3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
6.1 Public parks in government residential colonies, government offices and other public
areas are developed and maintained by CPWD.
6.2 Maintenance of community assets, urban forestry, protection of the environment and
promotion of ecological aspects are functions entrusted to Panchayats and Municipalities under
Article 243G and 243W read with Sr. No. 29 of 11th Schedule and Sr. No. 8 of 12th Schedule of
the constitution.
6.3 Sr. No. 3 and 3A of notification No. 12/2017-CTR exempt pure services and composite
supply of goods and services in which value of goods does not constitute more than 25%, that are
provided to the Central Government, State Government or Union territory or local authority by
way of any activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution or in relation to any function entrusted to a Municipality under article 243W of the
Constitution.
6.4 Accordingly, it is clarified that supply of pure services and composite supplies by way of
horticulture/horticulture works (where the value of goods constitutes not more than 25 per cent
of the total value of supply) made to CPWD are eligible for exemption from GST under Sr. No.
3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
7. Difficulties, if any, in implementation of this circular may be brought to the notice of the
Board.
Yours faithfully,
(Rajeev Ranjan)
Under Secretary, TRU
