No GST will Charge on Reimbursement of Tree Cut Compensation paid to Farmers and Land Owners, If the Applicant qualify to be a Pure Agent : AAR [Read Order]

The Karnataka Authority of Advance Ruling (AAR) held that if the applicant qualifies to be a pure agent there is no GST charge on reimbursement of tree cut compensation paid to farmers and landowners.

The applicant is a partnership concern. They execute government projects on a tender basis and their main area of expertise is water supply and underground drainage work .The applicant was awarded a contract for establishment under Karnataka power transmission corporation Limited.     

Applicants submit that as per the agreement between Karnataka power Transmission Corporation Limited the work order amount did not include the compensation amount paid to farmers  and the finance advisors of KPCL clarify that this transaction did not attract GST.

The authority while considering the submission of the applicant found that the applicant land, tree cut, crop compensation to farmers and landowners to the extent of reimbursement of land compensation

The authority consisting of member M P Ravi Prasad and Kiran Reddy T. ruled that Reimbursement of tree cut compensation paid to farmers and landowners during the course of execution of work is not chargeable to GST as the applicant qualified to be pure agent.

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