2022 (4) TMI 401 - AAR - GST

Valuation of supply - supply of Superior Kerosene Oil (SKO) made by the applicant to MR Dealers (ration dealers) in terms of the license granted by the Director of Consumer Goods, Government of West Bengal - HELD THAT - In the instant case, the applicant admittedly charges, other than price of kerosene, commission, transportation charges, stationery charges, compensation on handling evaporation loss, to the recipient of goods i.e., dealers which are permitted / approved by the Director of Consumer Goods, Department of Food and Supplies, Government of West Bengal. The amount received by the applicant against supply of S.K. Oil together with consideration received in respect of other elements as discussed earlier, shall form a part of the value of supply on which tax shall be levied in terms of sub-section (1) of section 9 of the GST Act. The value of supply, as per clause (c) of sub-section (2) of section 15, shall include 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. Thus, in respect of supply of goods, any amount charged for anything done by the supplier at the time of, or before delivery of goods shall be a part of the value of supply.

Issues Involved:
1. Whether the applicant is a service provider or supplier of goods?
2. Whether the output tax is chargeable on the total consideration received or only on the basic price?
3. Whether an agent of S.K. Oil lies under the category of a fair price shop?

Issue-wise Detailed Analysis:

1. Whether the applicant is a service provider or supplier of goods?

The applicant is engaged in the distribution of Superior Kerosene Oil (SKO) as an agent of Indian Oil Corporation Limited (IOCL). The GST Act defines "goods" in sub-section 52 of section 2 as every kind of movable property other than money and securities. The applicant procures SKO from IOCL and supplies it to MR Dealers as per the instructions of the Government of West Bengal. The sale of kerosene oil by the applicant is a form of supply for consideration in the course of business, thus categorizing the applicant as a supplier of goods.

2. Whether the output tax is chargeable on the total consideration received or only on the basic price?

The applicant has been charging output tax on the total consideration received, which includes the basic price of SKO, agent commission, transport charges, stationery charges, and compensation for handling and evaporation loss. According to section 15 of the GST Act, the value of supply includes the transaction value, which is the price paid or payable for the supply where the supplier and recipient are not related, and the price is the sole consideration. The officer from the revenue stated that the value of supply should include the cost of acquisition of kerosene oil and incidental expenses such as commission. The Authority concluded that the amount received by the applicant against the supply of SKO, along with other considerations, forms part of the value of supply on which tax shall be levied. Therefore, tax would be levied on the entire value of supply.

3. Whether an agent of S.K. Oil lies under the category of a fair price shop?

A fair price shop, as defined under the National Food Security Act, 2013, is licensed to distribute essential commodities to ration card holders under the public distribution system. The applicant, however, procures SKO from the Oil Marketing Company and supplies it to MR Dealers (ration dealers), not directly to ration card holders. Therefore, the applicant cannot be regarded as a 'fair price shop.'

Ruling:

Question: Whether the applicant is a service provider or supplier of goods?
Answer: The applicant is found to be engaged in the supply of Superior Kerosene Oil.

Question: Whether the output tax is chargeable on the total consideration received or only on the basic price?
Answer: Tax would be levied on the entire value of supply.

Question: Whether an agent of S.K. Oil lies under the category of a fair price shop?
Answer: The applicant, being an agent licensed to supply S.K. Oil to dealers, cannot be regarded as a 'Fair Price Shop.'

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