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2021 (1) TMI 1287 - AAR - GSTLevy of GST - GTA Services - diesel filled free of cost by the service recipient in the engaged chartered (dedicated) vehicles, would form part of value of supply of service charged by the applicant or not - HELD THAT - The applicant in the instant case is required to provide trucks / trailers on a day to day basis along with the driver and report at the unit of the service recipient and the fuel for providing such service has been kept within the scope of the service recipient and not in the scope of work of the applicant. Thereafter the applicant will be issuing consignment note /bilty for each vehicle load / consignment. As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, goods transport agency or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. There can be no dispute whatsoever as regards the fact that fuel forms the single most important factor in rendering Goods Transport Service by a GTA and to visualize a Goods Transport Agency providing Goods Transport service without having any obligation or responsibility towards fuel / fuel cost is inconceivable. Cost of Fuel is definitely a consideration for the said supply as per the definition of consideration supra, in the course of furtherance of business and forms the most vital part in the intended supply of goods transport service by a GTA. Goods Transport Agency or GTA provides service in relation to transport of goods by road and to perceive provision of this service without the element of fuel, can in no way be a logical or workable proposition - if the proposed concept of provision of free of cost diesel by the service receiver for the instant supply of service of transportation of goods by road that too unaccounted by the service provider CIA, is justifiable it becomes all the more inconceivable to visualize a situation when the service receiver would besides providing free of cost diesel would also be providing free of cost trucks/trailers for the instant supply. It is also seen that subsection (4) to Section 15 of the CGST Act, 2017 provides that where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed. In the instant case, as price doesn't appear to be the sole consideration for the supply in question, in as much as diesel the most important ingredient consumable required for rendering the said supply of service of transportation by the applicant GTA is being provided by the service receiver, resort has to be taken to the valuation rules as prescribed - in the instant case in hand, where the supply of service being rendered is transportation of goods by road by the applicant GTA, and as diesel being provided free of cost being a consideration not wholly in money, the value of such supply shall be the sum total of consideration in money and such further amount in money as is equivalent to the consideration not in money which is known at the time of supply. This also goes on to substantiate that the cost of diesel provided by service receiver is to be considered for arriving at the GST liability in such supply. In the instant transaction by the applicant diesel filled free of cost by the service recipient in the engaged chartered (dedicated) vehicles would form part of value of supply of service charged by the applicant and accordingly GST at the applicable rate would also be leviable on value inclusive of the cost of diesel filled by the service recipient, under GTA service.
Issues Involved:
1. Whether diesel filled free of cost by the service recipient in the engaged chartered (dedicated) vehicles would form part of the value of supply of service charged by the applicant. 2. Whether GST would be leviable on the value of diesel filled free of cost by the service recipient under GTA service. Detailed Analysis: 1. Diesel Filled Free of Cost as Part of Value of Supply: The applicant, engaged in providing transportation services, sought an advance ruling on whether diesel filled free of cost by the service recipient should be included in the value of supply. The applicant contended that since the fuel is provided by the service recipient and not included in the contractual obligation of the applicant, it should not form part of the value of supply. The legal provisions under Section 15 of the CGST Act, 2017 were analyzed, which stipulate that the value of a supply of goods or services shall be the transaction value, i.e., the price actually paid or payable. Section 2(31) defines "consideration" to include any payment made or to be made, whether in money or otherwise. The ruling clarified that the cost of fuel is a significant component in providing transportation services and constitutes consideration as per the definition. The provision of free fuel by the service recipient is an attempt to circumvent tax liability, and the cost of fuel is indispensable for the service provided. 2. GST Leviability on Free Diesel: The ruling further examined the applicability of GST on the value of diesel provided free of cost. Section 9(1) of the CGST Act, 2017 mandates tax on the value determined under Section 15. The court referenced the Supreme Court's decision in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd., which emphasized that the value of taxable services should be the gross amount charged for the service provided. In this context, the cost of diesel is integral to the transportation service and must be included in the taxable value. The ruling also addressed the applicant's references to previous case laws and circulars, distinguishing them from the present case. It was noted that the cited cases pertained to the erstwhile service tax period and were not applicable under the current GST regime. The court reiterated that the cost of fuel is a vital component of the transportation service and must be accounted for in the value of supply. Conclusion: The Authority for Advance Ruling concluded that the cost of diesel filled by the service recipient forms part of the value of supply of service charged by the applicant. Consequently, GST at the applicable rate would be leviable on the value inclusive of the cost of diesel under GTA service. Order: The ruling confirmed that the cost of diesel filled by the service recipient in the engaged chartered (dedicated) vehicles would form part of the value of supply of service charged by the applicant, and GST would be applicable on the inclusive value.
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