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Home Case Index All Cases GST GST + AAR GST - 2021 (1) TMI AAR This

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2021 (1) TMI 1287 - AAR - GST


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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