GST leviable on supply of water even if supplier entered two agreements for supply of water and maintenance services

  • GST
  • Case Law
  • High Court

Fact of the Case 

  • The applicant was developing a group housing project and concluded agreements with prospective buyers for maintenance work, operation of services and maintenance costs/charges for capital repairs and replacements.
  • It also entered a Memorandum of Understanding (MOU) with each buyer for supply of water and would receive reimbursement of proportionate costs of water for use in horticulture, sanitation and other common use.
  • It filed a request for advance ruling to determine whether the supply of water to individual units in the project under the MOU would be a separate supply of goods or composite/mixed supply with that of maintenance services.


  • The Authority for Advance ruling observed that the applicant would provide maintenance services.The applicant signed two agreements, first was maintenance agreement, under which it would provide maintenance services and another MOU for the supply of water to the individual resident living in the society.
  • As a general practice across trade and market, the maintenance services would be inclusive of supply of water and hence supply of water provided by the applicant through a separate agreement i.e., MOU in the current case, was for escaping from GST liability.
  • Since, maintenance agreement and MOU were directly linked to each other; Thus, it was held that the applicant would be required to pay GST on supply of water even if it entered two agreements for supply of water and maintenance services., et al.