9911796707
TMI Blog2024 (7) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... ces Tax Act, 2017 (hereinafter referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference herein after to the provisions of the CGST Act, Rules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under. 3. The applicant requested advance ruling on the following: 3.1. Whether differential dealer margin provided by the petroleum companies to its retail dealers are taxable under GST as a supply of service? 3.2. If it is taxable, then what is the justification for bringing the same under the purview of GST? 3.3. If it is taxable, then under which rate of GST? 4. Contentions of the Applicant: 4.1. The Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant further submits that as per Sec. 9 (1) of the CGST Act, 2017, tax is levied on the supply of goods or services on the value determined u/ s. 15. The scope of supply as defined u/s. 7 (1) (a) of the CGST Act, 2017 includes the supply of goods or services or both by way of sale or services made or agreed to be made for a consideration. 4.4. The applicant submits that as a condition in the contract, the original price for the sale of Petroleum Products varies subsequently to account/ adjust for the discounts/incentives on achieving certain targets or conditions. Hence such discounts/ incentives are said to reduce the original price payable by the Retail outlets (dealers) on account of fulfilling certain conditions in the contract and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products is governed by section 5(a) of KERALA GENERAL SALES TAX ACT 1963 which reads as under; "5 (a) in respect of Petroleum products falling under Sl. No. of the Schedule, at the point of sale in the State by an oil company liable to tax under the section except where the sale is by an oil company to another oil company and at the point of first sale in the State by a dealer liable to tax under this section when the sale is not by an oil company.- - - -" All the sales of retail outlets are from out of sales in the State by an oil company and is so exempt. Similarly any connected discount / Incentive on sale of petrol is also exempt as there is no provision under KERALA GENERAL SALES TAX ACT 1963, to tax the same. 4.8. The Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20.12.2023 through Virtual Mode. Sri. T. G Madhavan Unni, Advocate and authorized representative represented the applicant, and filed detailed statement of facts along with the application. He requested to issue the ruling on the basis of the sober fissions made by them in the application and during the personal hearing. 7. Discussion and Conclusion: 7.1. We have gone through the facts of the matter, documents on record and submissions both oral and written, made by the applicant as well as the jurisdictional officer. The questions before us are (a) whether differential dealer margins provided by the petroleum companies to its retail dealers are taxable under GST as a supply of service? (b) If it is taxable, then what is the justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that the first reason cited by the applicant for nonpayment of tax is not valid, Further, in view of the above, Circular 29/2019 (F 17(134) AACT/GST/20I 7/4596 dtd 28-06-2019 cannot be cited as a reason for non-payment tax by the applicant. 7.4. Further CBIC New Delhi vide para No: 6 of its Circular No. 178/ 10/2022-GST dated 03,08.2022 clarified that "there must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration". In the instant case HPCL provides the differential margin based on the agreement and the consideration is related to the decrease in sales volume. Differential dealer margin is given only to a dealer and not to the general public. The am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at "as per section 9 (2), the central tax on the supply of petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council" and as on date these goods are not-taxable in GST. 7.8. There is no dispute that the applicant's supply of petrol/diesel to end customer is not taxable to GST. However, as already discussed above, the supply in the present case is that of the service of agreeing to the obligation to refrain from an act. As per the Annexure: Scheme of Classification of Services annexed to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time ..... X X X X Extracts X X X X X X X X Extracts X X X X
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