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2022 (5) TMI 960 - AAR - GSTLevy of GST - Valuation - inclusion of re-gasification charges - LNG imported by Customers - Section15 of the CGST Act? - HELD THAT:- In GST law, as per Section 17(5)(h) CGST Act, ITC is blocked for goods lost. However, it cannot be ascertained, by cross referencing with M/s Shells customers if the goods(SUG) as cited by M/s Shell are lost as process loss; since LNG being non GST item, the customers( who are the principal) cannot avail ITC under the GST scheme of law on its LNG in toto, therefore reversal of ITC on process loss concept does not arise at all in this case and thereby the checks and balances framed in GST scheme of law for process loss cannot be verified in this case - Though this is not the matter before us, we do note that as Shells customers are not paying the value portion on the SUG invoices, but paying only the tax amounts, the customers cannot avail ITC on the tax portion reflected in the Shell’s SUG invoices as per 2nd Provisio to Section 16(2) CGST Act, its customers have not paid the value portion of SUG invoices. This system use gas is- (a) used by M/s Shell as fuel for re-gasification plant (b) retained as its gain (c) used for flaring which is an incidental expensing for the re-gasification procedure and falls within the scope of costs incurred for regasification service. For this, we hold that amount of SUG value charged on its customers vide GST invoices does fall under the cost of provision of service of Re-gasification and thereby an indispensable component of taxable value of re-gasification service supply by M/s Shell - this gas charge which is used by M/s Shell is cost on re-gasification services, to be precise it is an expenses incurred by M/s Shell for the Re-gasification scope of service to be supplied to its customers and as M/s Shell is not purchasing gas from market but made an agreement with customer for a SUG quantity to be provided to customers for the subject service supply, it is found that this SUG quantity to be provided by its customers is now translated into SUG value by M/s Shell invoices raised on its customers. The literal meaning of the phrase ‘ System Use Gas’ has been justified as the gas has been used by system. Now the scope of re-gasification services covers not just regasification but an entire gamut of activities from unloading LNG from the Ships, its storage, its re-gasification along with safety measures and thereafter the delivery to the customers. It is found that system use gas charges raised on its customers vide GST Tax Invoices are part and parcel of Re-gasification service supply. The scope of re-gasification service supply cannot be dissected to favour only a portion of invoice charged on its customers as taxable by misreading re-gasification service to mean only re-gasification of LNG into RLNG. Thus value of SUG is an indispensable part of taxable value, for Re-gasification service supply by M/s Shell and liable to GST.
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