DH Maintenance Limited, which provides maintenance and facility-management services for a commercial building, sought clarification on whether the recovery of electricity charges at actual cost, without any markup, could be considered as pure-agent reimbursement and thus excluded from the taxable value of their services. The company pays electricity charges to CESC and recovers these costs from individual unit holders, covering normal office, HVAC, and common-area consumption. They proposed a billing change to recover electricity charges at the same rate charged by CESC, without profit, separately from Common Area Maintenance (CAM) charges.
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The issue was whether this recovery qualifies as pure-agent reimbursement under Circular No. 206/18/2023-GST and Rule 33, thereby excluding it from the GST value of the maintenance services. The Authority noted that while electricity is typically part of a composite supply with maintenance as the principal supply, the circular provides an exception when electricity is recovered on an actual cost basis.
The Authority found that DH Maintenance Limited's proposed billing method, which recovers electricity costs based on sub-meter readings and apportions common-area electricity according to occupied area without any markup, qualifies as pure-agent recovery. Consequently, the electricity charge recovery would be excluded from the taxable value of the applicant's supply, and GST would not be applied to this portion.
Order Date - 01 September 2026
Facts -
- DH Maintenance Limited provides common-area maintenance and facility-management services for a commercial building and also pays electricity charges to CESC, which it recovers from individual unit holders.
- The electricity recovery covers normal office consumption, HVAC consumption and common-area consumption. Individual consumption is measured through sub-meters, while common-area electricity is proposed to be apportioned among occupants based on their respective super-built-up area.
- The company proposed changing its billing pattern so that electricity would be recovered at the same rate charged by CESC, without any markup or profit, with the electricity components separately identified along with Common Area Maintenance (CAM) charges.
- The applicant therefore sought a ruling on whether such recovery would qualify as pure-agent reimbursement under Circular No. 206/18/2023-GST and Rule 33, and whether GST would apply.
Issue -
- Whether recovery of electricity charges from occupants at actual cost, without markup, including HVAC and common-area electricity, qualifies as pure-agent recovery and is therefore outside the GST value of the applicant's maintenance supply.
Order -
- The Authority first noted that electricity supplied along with maintenance services ordinarily forms part of a composite supply, with maintenance being the principal supply and electricity an ancillary supply. Merely billing electricity separately does not, by itself, change this treatment.
- However, the Authority found that Circular No. 206/18/2023-GST creates a specific exception where electricity is recovered on an actual basis. Where the same amount charged by the DISCOM is recovered from occupants, the supplier is deemed to be acting as a pure agent for that electricity supply.
- The Authority observed that the applicant's proposed billing method would recover the same electricity cost charged by CESC, based on sub-meter readings for normal and HVAC consumption, with common-area electricity apportioned according to occupied area. No markup or profit would be added.
- Accordingly, the Authority ruled that the electricity recovery can be deemed to be made in the capacity of a pure agent, and the recovered electricity value would be excluded from the applicant's total value of supply. GST would not be levied on this excluded amount.
