TMI Blog2022 (10) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... siness transaction was required to include the cost of fuel, but for the wordings (read terms and conditions which apparently suites themselves) inserted in the agreement that too between two private entities, are trying to circumvent the statute, which appears was not the intent of the Parliament - It is observed that without the fuel the vehicle does not operate (run) and without running i.e. moving from one place to another, the act of transportation of goods by road does not happen. The goods transport service has the integral component of moving of goods from one place to another and for this to undertake a vehicle in running condition, an operator etc. are required. The running condition of a vehicle cannot be achieved without the fuel, as in absence of fuel the vehicle cannot move from one place to another to transport the goods. The input i.e. fuel, to run and operate the vehicle, provided free of cost by the recipient of the service, for transportation of goods, shall form part of value of supply in view of Section 15 of the CGST Act, 2017, as the cost of this input has to be paid by supplier of services but incurred by the recipient (as per the terms and condition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile charging GST at the applicable rate, on the freight consideration charged by them from the recipient under forward charge mechanism, cost of the fuel consumed/ used for transport of the goods would not be include therein. In view of the above facts, 'the applicant' is seeking advance ruling as to Whether the value of free diesel filled by service recipient under the accepted terms of contractual agreement in the fleet(s) placed by GTA service provider will subject to the charge of GST by adding this free value diesel in the value of GTA service, under the Central Goods and Services Tax Act, 2017 Uttarakhand Goods and Service Tax Act, 2017? 3. At the outset, we would like to state that the provisions of both the CGST Act and the SGST Act 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 SGST Act. 4. The Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Mohit Minerals Pvt. Ltd v. UOI 2020 (1) TMI 974 and hence tax can only be levied on the (i) activity agreed between the parties under the contract (ii) undertaken by parties falling within ambit scope of CGST Act. (b) GST is on Supply- Section 7 (1) (a) reads that supply includes all forms of supply of goods or services or both ... for a consideration by a person in the course or furtherance of business. In present case, there would be supply of GTA services by the applicant for consideration viz. freight, to the service recipient and the only consideration flowing between the parties, agreed under the contract, is freight charges as the Fuel is not a consideration as in-seriatim agreed under the contract between the applicant the service recipient. GST is tax on consumption and not on business. Hence, in present case, what is being consumed by the service recipient will be only the activity carried by the Applicant i.e., GTA service consequently freight charges. The FOC fuel, being liability of the service recipient on its own cannot be said to be a value addition brought forth by the Applicant. Hence, such free fuel cannot be made leviable to GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T shall be the freight charges i.e., the consideration agreed under the contract between the parties for the GTA services of the applicant. The value of fuel, which is owned by and falls under the contractual liability of the service recipient, should not be added to the value of supply by the applicant for the reasons that Applicant is not liable for Fuel i.e., under the agreement between the parties, free of cost fuel is liability of service recipient only and not liability of the applicant, therefore, it cannot be said that the amount incurred by the service recipient for purchasing fuel was an amount that the applicant is liable to incur for providing GTA service. Accordingly, Section 15(2)(b) of the CGST Act, will not apply to the present matter as contractually the applicant is not liable to pay for the fuel. Contractually, Fuel is the liability of the service recipient. Thus, value of fuel cannot be added to the assessable value for payment of GST in the hands of the applicant. (e) Price/freight charges are sole consideration for supply by the applicant FOC fuel is not an additional consideration (nonmonetary) for such supply. Free of cost fuel would be filled in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental 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; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation .- For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; and (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both. From the above, it very clear that the Section 15 of the CGST Act, 2017 mandates that the value of supply shall include among other things, any other amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both. We find that the provisions of the Section 15 above are very clear and in unambiguous terms it has been mandated that any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the goods from one place to another but by merely issuing consignment notes, the service cannot be termed and classified as GTA service , as the ingredient of transport of goods comes into play, when and only when the vehicle in running condition along with operator have been provided by the service provider. The running condition implies that all the upkeep, maintenance, operation including that of fuel is the liability of the service provider. We also find that the Price/freight charges as referred to by the applicant are insufficient for supply of GTA Services as claimed by them. Further the contention of the applicant that Contract price cannot be rejected as it will tantamount to undermining freedom of contract and sanctity of contract between the parties holds no ground as it is not sacrosanct being against the essence and spirit of the GST enacted by the Parliament. Hence we observe that for GTA service to come into play, the transportation of goods has had to be undertaken by the applicant only and hence the amount on account of the price of fuel that the supplier was liable to pay in normal course of business operation and in relation to such supply, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
