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GST council, since the introduction of GST, is trying to simplify the tax structure of the country to help businesses easily comply with the rules and regulations. With a wide range of provisions, rules, and regulations there are major chances of misinterpretation and misunderstanding of such provisions which may lead businesses to unnecessary penalties, fees, and interest due to errors and discrepancies in compliance.

To avoid such misinterpretations the GST Council comes up with circulars to clarify complicated provisions under GST. One such circular with circular No 206/18/2023- GST was released by the department on 31st October 2023 to provide clarification regarding GST applicability on certain services based on the recommendations made in the 52nd GST Council Meeting held on 7th October 2023.

This blog will delve into the detailed explanation and interpretation of the clarifications recently issued by the department.

1. Whether ‘same line of business’ in the case of passenger transport service and renting of motor vehicles includes leasing of motor vehicles without operators.

The above clarification is for the service of leasing motor vehicles without an operator shall be taxable at a rate applicable to services of passenger transport services and renting of motor vehicles considering it as the “same line of business”.

The circular clarifies that the same line of business means the service of transporting passengers in motor vehicles or renting of motor vehicle taken from another service provider.

Therefore, it is clarified that the leasing of motor vehicles without an operator (SAC 9973) does fall in the same line of business as that of services of passenger transport and renting of motor vehicles with an operator where the cost of fuel is added to the consideration charged.

Therefore, the service of leasing motor vehicles without an operator will attract GST and/or compensation cess at the same rate as that of the supply (sale) of motor vehicles.

2. Whether GST is applicable on reimbursement of electricity charges received by real estate companies, malls, airport operators, etc. from their lessees/occupants.

The above clarification is for the electricity charges reimbursed from the lessees and occupants to the real estate companies, malls, airport operators, etc. To clarify whether GST will apply to the said service even though the supply of electricity is not taxable under GST.

The department has come up with 2 scenarios. One in which the service will be considered as a composite supply and the other in which the supply of electricity by real estate companies will be considered as the service by pure agent.

When there is renting of immovable property or maintenance of premises, it is clarified that the electricity service will be considered ancillary service and shall be bundled with the main service i.e., renting of immovable property or maintenance of premises and form a composite supply where the rate of principal supply (rate of renting of immovable property or maintenance of premises) shall be applicable even though the separate bill is charged for the electricity service. 

Now if the electricity charges are reimbursed by the real estate owners, real estate developers, resident welfare associations, etc. as pure agents i.e. the same value as charged by the state electricity board or DISCOMs without adding any additional amount in whatever name called from the lessees or occupants then GST will not attract and the service will not be taxable.

3. Whether job work for processing “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 the manufacture of alcoholic liquor for human consumption”.

The above clarification is for the malted barley produced by doing job work on barley. So, the question is whether malted barley will be considered a food and food product on which 5% GST is applicable or it will be considered as job work to manufacture alcoholic liquor for human consumption on which 18% of GST is applicable.

It is clarified that malt is a food product and can be consumed directly as a part of food or it can be an ingredient in food products, or it can be added to beer and alcoholic liquor for home consumption. However, irrespective of the end use of malt, conversion of barley into malt barley is considered job work for food products, and 5% of GST will apply to it.

4. 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.

The above clarification is to know whether the GST exemption which is available to any governmental authority is available to the services provided by the DMFTs that are set up by the state governments or government authorities.

It is clarified that the DMFTs are set up to provide services to the persons or areas affected by mining-related operations by regulating the receipt and expenditure of mineral development funds (DMF) created in the concerned district.

They provide service of drinking water supply, environmental protection, health care facilities, education, and welfare for women and children, and these facilities are enlisted in the Eleventh Schedule and Twelfth Schedule of the Constitution and are used by individuals, women, children, families, farmers, SHG of mining-affected areas, etc. free of cost without charging anything from the beneficiaries.

Therefore, the services provided by the DMFTs set up by the state government or governmental authorities will be exempt from the GST.

5. Whether supply of pure services and composite supplies by way of horticulture/horticulture works (where the value of goods constitutes not more than 25 percent 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

It is to clarify whether the supply of services by way of horticulture/horticulture works made to CPWD are eligible for GST exemption based on the notification mentioned.

Here, the CPWD maintains and develops public parks in governmental residential colonies, government offices, and other public areas.

 The service of maintenance of community assets, urban forestry, protection of the environment, and promotion of ecological aspects are given to panchayat and municipalities under articles 243G and 243W respectively of the constitution.

The above-mentioned notification exempts the supply of pure services and composite supply of goods and services in which the value of goods does not exceed 25% of the total value of the supply that is provided to the central government, state government, or union territory or local authority by way of any activities or in relation to any function that is entrusted to panchayat or municipality under the article 243G and 243W respectively of the constitution.

By correlating the above explanations it is clarified that the service of the horticulture work given to CPWD where the value of goods is not more than 25% of the total supply will be considered exempt under GST. 


Thus, the circular provides proper clarification regarding the taxability of various services which will help businesses derive their liability related to tax with accuracy and also provide transparency in the interpretation of the provisions.

Komal Vithalani

Komal Vithalani

Content Writer

Komal Vithalani, a Chartered Accountant and Commerce graduate, is a dedicated professional committed to delivering value with years of expertise in navigating the complexities of indirect tax laws. Her practical excellence includes managing perplexed litigations, dispensing tactical tax advice, conducting thorough compliance checks, supervising audits, and crafting articulate and insightful content. At Cygnet, Komal seamlessly blends her profound understanding of tax regulations with cutting-edge tax technology. Leveraging her competence, she adeptly transforms complex tax tech jargon into concise, impactful, and engaging content. This not only aids readers in comprehending tax-related topics with enlightening clarity but also ensures the delivery of narratives that resonate broadly.

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