TMI Blog2020 (9) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply - In the instant case, where the applicant and the customer are unrelated parties, the price actually paid or payable for the supply of services includes the value of services i.e. Rental services of aircraft including passenger aircrafts, freight aircraft and the like with or without operator as well as the amount for the fuel filled in the aircraft by the applicant, which would be the sole consideration for the supply as per the said section. Whether the applicant satisfies all the conditions and satisfies the conditions of a pure agent? - HELD THAT:- The conditions to satisfy the term Pure Agent fails in the present case. In terms of the valuation provisions under GST legislation, amount recovered as reimbursement (at actual) by the applicant M/s. Global Vectra Helicorp ltd. from the customer, for the fuel procured on behalf of the Customer is required to be included in the value of services provided by the Applicant. - GUJ/GAAR/R/21/2020 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2018/AR/46) - - - Dated:- 2-7-202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ONGC at Mumbai and Offshore. For other locations, ATF charges shall be reimbursed as per actuals on production of original vouchers from the ATF supplier of the concerned Airport. In case due to any reason ONGC is unable to supply ATF at Mumbai, operator has to make arrangements for the ATF. ATF charges shall be reimbursed as per actual on production of original vouchers from the ATF supplier in Mumbai. - Clause 11.2 Flying Hour Charge (FHC) (per helicopter) - Clause 11.2.1 states as follows: Charterer shall in respect of the chartered helicopter pay Contractor the corresponding hourly flying charges per hour and pro-rata basis for the flying hours of each such helicopter(s) as per following rates: The FHC is excluding of ATF price. The hourly charge is all inclusive airport charges, customs duty, insurance charges etc. ATF shall be provided as free supply item by ONGC at Mumbai and Offshore. For other locations, ATF charges shall be reimbursed as per actual on production of original vouchers from the ATF supplier of the concerned airport. The applicant has stated that from a reading of the clauses of the aforesaid contract, it is evident that ONGC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that the value of a supply of services shall be the transaction value i.e. the price actually paid or payable for the said supply of services or where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply; that in the instant case, the applicant agreed to provide charter hire services and for the said services, the applicant is entitled to receive consideration from ONGC as follows: (i) fixed monthly charges are generally per month and (ii) flying hourly charges are per hour; that as per Charter Hire Agreement, the only consideration paid or payable to the applicant for the services rendered is in the form of fixed monthly charges and flying hourly charges; that in terms of Section 2(31) of the GST legislation, the term consideration in relation to supply of services to any person includes any payment to be made, in money or otherwise in respect of supply of services; that the applicant is duly discharging its GST liability on fixed monthly charges and flying hourly charges under the HSN heading 996603 Rental services of aircraft including passenger aircrafts, freight aircraft and the like with or without operator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses the phrase value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services and that fuel debit notes is not a consideration for the services provided by the applicant; that Section 67 of the Finance Act, 1994 provided that valuation of taxable services for charging service tax, is the gross amount charged for providing such taxable services and that the same principle can be applied for determining the value of taxable supply under the GST regime. The applicant has placed reliance on the judgement of the Hon ble Supreme Court of India in the case of Union of India Anr. v/s. M/s. Intercontinental Consultants and Technocrats pvt.ltd.(Civil Appeal No.2013 of 2014) wherein the Supreme Court held as under: In this hue, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing such taxable services, as a fortiori, any other amount which is calculated not for providing such taxable service cannot be a part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse has been defined as an expenditure of money, time, labour, or resources to accomplish a result; esp. a business expenditure, chargeable against revenue for a specific period. Oxford dictionary defines the term incidental as happening as a minor accompaniment to something else or happening as a result of (an activity) . The term expense is defined as the cost incurred in or required for something ; Freedictionary.com defines the term incidental expense as an expense not budgeted or not specified . Dictionary.com defines the term incidental as happening or likely to happen in an unplanned/subordinate conjunction with something else, incurred casually and in addition to the regular or main amount; The applicant has stated that going by the rule of literal construction and in absence of specific definition in the cardinal rule of construction in this regard, any expense which is not budgeted or likely to happen in an unplanned manner and which is incidental to the main or primary supply is an incidental expense ; that in the instant case, from the reading of the relevant clauses of the contract, it is evident that the provision of fuel cannot be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition (a) above, the applicant has stated that as per the contract between the applicant and the customer, it has been agreed that the provision of fuel for flying the aircrafts is the responsibility of the customers and in case the fuel cannot be arranged by the customer, the applicant would incur the cost of fuel and get it reimbursed from the customer at actual. Thus the applicant is undertaking to incur certain costs, for which the recipient is liable and therefore this condition is satisfied. Regarding condition (b) above, the applicant states that he does not hold or intends to hold any title to the fuel so procured for flying of the aircrafts and by incurring the cost of fuel on behalf of the customers and reimbursement of the same by the customers to the applicant, it establishes that the applicant does not hold title to the fuel so procured on behalf of Customers and therefore this condition is also satisfied. Regarding condition (c) above, the applicant has stated that as per contract, the provision of fuel for flying the aircrafts is the responsibility of the customers and in case where the fuel was not provided by the customer in certain agreed specified areas, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation, amount recovered as reimbursement (at actual) by the applicant from the customer, for the fuel procured on behalf of the Customer is required to be included in the value of services provided by the Applicant? DISCUSSION FINDINGS 9. We have considered the issue involved on which advance ruling is sought by the applicant, relevant facts, applicant s interpretation of law as well as the arguments/discussions made by their representative Shri Anand Nainawati at the time of personal hearing. 10. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 11. On going through the submission given by the applicant, we find that they are providing services Rental services of aircraft including passenger aircrafts, freight aircrafts and the like with or without operator classifiable under Heading 9966 of Notification No.11/2017-Central Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8/1998) issued by the Directorate General of Civil Aviation (hereinafter referred to as the DGCA ) and employs a fleet of around 30 helicopters (aircrafts) for the purpose. Under the charter hire services entered into by the applicant with various customers, the applicant is responsible for operating and maintaining the aircrafts. The applicant employs experienced and qualified pilots and qualified engineering crew in accordance with aviation standards and ensures that the Aircrafts are available and fully operational during the term of the contract. Aviation Turbine Fuel (ATF) is required for flying the Aircrafts. While in terms of the contracts, the applicant agreed to provide rental services of aircraft (with or without operator) in respect of the ATF, it was agreed that provision of the same for the purpose of flying of the aircrafts would be the responsibility of the Customers. However, at locations where the customer is unable to provide the fuel, in order to ensure continuity of flying, the contract requires GVHL to procure the fuel on behalf of the Customer and subsequently the cost of the fuel is reimbursed by Customer at actual (without charging any mark-up). GVHL under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fuel filled in the aircraft by the applicant. Therefore, the amount of ATF fuel, which is received as reimbursement by the applicant will undoubtedly form a part of the consideration i.e. the value of the services provided by the applicant and GST is liable on the same. 12.1 Further, the value of taxable supplies is provided under Section 15 of CGST Act, 2017, which is reproduced here as under: SECTION 15. Value of taxable supply. - (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include - (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services of aircraft including passenger aircrafts, freight aircraft and the like with or without operator as well as the amount for the fuel filled in the aircraft by the applicant, which would be the sole consideration for the supply as per the said section. 12.3 Further, the judgement of the Hon ble Supreme Court of India in the case of Union of India Anr. v/s. M/s. Intercontinental Consultants and Technocrats pvt.ltd.(Civil Appeal No.2013 of 2014), which has been relied upon by the applicant pertains to the pre-GST era. Further, the said case law pertains to the period prior to 14th May, 2015, when the legislative amendments were not brought out in the Finance Act, 1994. But, this is not the case in GST law, since these provisions are already part of the CGST Act itself. Consideration has been clearly defined in Section 2(31) of the CGST Act, 2017. Section 15 of the CGST Act, 2017 elaborates in great detail, the things that are required to be included in the value of supply. Sub-section (2) of Section 15 itself starts with the words The value of supply shall include and goes on to elaborate the things required to be included in the value of supply. Sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; As per Section 15(2)(c) above, any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services would also form part of the value. In the instant case, the applicant is filling ATF fuel in the aircraft before the supply of services to the customer i.e. Rental services of aircraft including passenger aircrafts, freight aircraft and the like with or without operator and the amount of the ATF fuel is being charged from the customer, which the applicant is receiving in the form of consideration, which has been received by them as reimbursement. This act of the applicant would be considered as any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services and would, therefore, form part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. 15. We are, therefore, required to examine as to whether the applicant satisfies all the conditions mentioned hereinabove and satisfies the conditions of a pure agent, which are enlisted hereunder: (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; Clause 10.2.1.(iii) of Schedule-A of the contract of the applicant with ONGC (customer) dated 31.07.2015 reads as under: ATF shall be provided as free supply item by ONGC at Mumbai and Offshore. For other locations, ATF charges shall be reimbursed as per actual on production or original v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he supplies on his own account but a part of the above service since only as the ATF fuel filled in the fuel tank of the aircraft would enable the aircraft to fly and thus enable the applicant to provide the aforementioned service to their customer. Hence this condition is also not satisfied. 16. Further, as per Rule 33 of the CGST Rules, 2017, the following conditions are also needed to be satisfied to qualify as a pure agent : (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; Clause 10.2.1.(iii) of Schedule-A of the contract of the applicant with ONGC (customer) dated 31.07.2015 reads as under: ATF shall be provided as free supply item by ONGC at Mumbai and Offshore. For other locations, ATF charges shall be reimbursed as per actual on production or original vouchers from the ATF supplier of the concerned Airport. In case due to any reason, ONGC is unable to supply of ATF at Mumbai, operator has to make arrangement for the ATF. ATF charges shall be reimbursed as per actual on production of original vouchers from the ATF supplier at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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