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2021 (10) TMI 118 - AAAR - GSTValuation - amount recovered as reimbursement (at actual) by the appellant 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 appellant or not - pure agent services or not - Circular No. 47/21/2018-GST dated 8.6.2018 - HELD THAT - In the instant case, the appellant has charged the amount spent by them towards arrangement/providing of ATF for flying of Helicopter in respect of supply of rental service of helicopter provided to the ONGC. The appellant has collected the said amount in the form of reimbursement from their customer / recipient of supply of service and the said reimbursement is in respect of the arrangement/providing of ATF made by them, at the time of / before the delivery of supply of services to their customer/recipient. Thus, in terms of Section 15(2)(c) of the GST Acts, 2017, the arrangement of ATF/providing of ATF in the helicopters/aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from the customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) have been fulfilled and accordingly, the amount charged by the appellant (in respect of the arrangement/provision of ATF made by them for supply of Rental service of Helicopter ) from their customer in the form of reimbursement, is undoubtedly includible in the value of supply of services of Rental services of aircrafts in the instant case. In terms of Section 15(2)(c) of the GST Acts, 2017, the arranging of/provision of ATF in the helicopters/ aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from their customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) of the GST Acts, 2017 have been fulfilled and accordingly, the amount charged by the appellant (in respect of the ATF fuel) from their customer in the form of reimbursement, is undoubtedly includable in the value of supply of services of Rental services of aircrafts in the instant case. The contention of the appellant that the responsibility of supply or arrangement of ATF is that of the customer only, is far from the truth and simply unacceptable. Moreover, whether the appellant has derived any benefit in the form of mark-up or otherwise from the reimbursement of fuel from the customer, is not the sole factor for determination of valuation of supply of rental service of helicopter under the provisions of the GST Acts, 2017 and the rules frame there under . Further, the appellant stating that it cannot be contended that fuel was an essential component of the services provided by the appellant, is wrong and completely out of context since without supply of ATF, the helicopters of the appellant would not fly and there would be no supply of Rental services of aircraft by the appellant in the instant case. Since none of the conditions envisaged in the provisions of Rule 33 of the GST Rules, 2017 for being a Pure Agent have been fulfilled/satisfied by the appellant, they cannot be said to be pure agent in this case and therefore the amount of reimbursement received by the appellant will undoubtedly be included in the value of supply of Rental Services of Aircraft provided by them. Although the appellant have stated that fuel reimbursements from customers are not liable to GST as they are not debited to the P L, are treated as receivables from customers and on recovery of such receivables, the amounts recovered are adjusted against the receivables and that books maintained are as per accounting standards, the fact remains that the value of supply needs to be determined in accordance with the statutory provisions of the GST Acts, 2017 and rules framed there under, which have been elaborately discussed and the valuation of supply is not dependent on the accounting treatment given to any expenditure or cost, hence their contention cannot be accepted. Thus, in terms of the valuation provisions under GST legislation, amount recovered as reimbursement by the appellant M/s. Global Vectra Helicorp Ltd. from the customer, for the fuel procured for use in the helicopter provided on rent to customer is required to be included in the value of services provided by the Appellant.
Issues Involved:
1. Whether the amount towards fuel is required to be included in the value of services provided by the appellant under GST legislation. Detailed Analysis: Issue 1: Inclusion of Fuel Cost in Value of Services The appellant, M/s. Global Vectra Helicorp Limited (GVHL), provides rental services of aircrafts and, under certain conditions, procures Aviation Turbine Fuel (ATF) on behalf of the customers, with the cost being reimbursed by the customers. The appellant argued that the fuel cost should not be included in the value of services for GST purposes as it is reimbursed at actuals and does not constitute consideration for the rental services. The appellant filed an appeal against the Advance Ruling Order No. GUJ/GAAR/R/21/2020 dated 14.07.2020, which held that the reimbursed fuel cost should be included in the value of services provided by the appellant. The appellant cited various provisions of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) and the Gujarat Goods and Services Tax Act, 2017 (GGST Act, 2017), specifically Section 2(31) defining consideration, Section 9, Section 15, and Rule 33 of the GST Rules, 2017. They argued that the fuel cost does not constitute consideration for the rental services and should be excluded from the value of supply under GST. However, the appellate authority found that the appellant misinterpreted Section 15(2)(b) of the GST Acts, 2017. The authority noted that the appellant is primarily responsible for arranging fuel except at specified locations where the customer provides it. Therefore, the fuel cost not included in the rental service price must be included in the value of supply as per Section 15(2)(b). Further, the authority held that the amount charged by the appellant for fuel reimbursement falls under Section 15(2)(c) as incidental expenses. The appellant's activity of arranging/providing ATF is done at the time of or before the supply of rental services, making the reimbursement amount includable in the value of supply. The appellant's claim of acting as a "pure agent" was also dismissed. The authority noted that the appellant did not fulfill the conditions of Rule 33 of the GST Rules, 2017, which requires that the supplier acts as a pure agent, does not hold title to the goods, does not use the goods for their own interest, and receives only the actual amount incurred. The appellant's arrangement of fuel was found to be for their own interest to enable the provision of rental services, thus failing the pure agent criteria. The appellant's reliance on various pre-GST era judgments and Circular No. 47/21/2018-GST was also rejected. The authority clarified that the GST Acts, 2017, provide a detailed framework for valuation, which includes the reimbursement of expenses as part of the value of supply if the conditions of Rule 33 are not met. The authority concluded that the amount recovered as reimbursement for fuel procured for use in the helicopter provided on rent to the customer is required to be included in the value of services provided by the appellant under GST legislation. Therefore, the appeal filed by M/s. Global Vectra Helicorp Limited was rejected, and the Advance Ruling No. GUJ/GAAR/R/21/2020 was upheld.
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