2020 (6) TMI 541 - AAR - GST

Determination of the liability to pay Tax - sales of Gas sold in Bottle to Commercial Customer and Gas sold in Bottle to Domestic Customer - eligibility of ITC @ 18% eligible on Purchases of LPG Gas (bulk) through Tanker - HELD THAT - The applicant would be liable to pay 18% GST (9% SGST 9% CGST) on the LPG sold by them to their Commercial Customers. They would be liable to pay 18%(9% SGST 9% CGST) on the LPG sold to their Domestic Customers for the period upto 24.01.2018 and 5% (2.5% SGST 2.5% CGST) on the LPG sold to their Domestic Customers with effect from 25.01.2018 onwards. Input Tax Credit - HELD THAT - Input tax determined under sub- rule (1) shall not be required to be calculated finally on completion or first occupation of an RREP which underwent transition of input tax credit consequent to change of rates of tax on 1st April, 2019 in accordance with notification No. 11/2017- Central Tax (Rate), dated the 28th June, 2017, published vide GSR No. 690(E) dated the 28th June, 2017, as amended - the applicant is eligible to take the entire input cenvat credit @ 18% on purchases of LPG Gas in bulk through Tanker subject to the fulfilment of the conditions/provisions (wherever applicable) for taking input tax credit as envisaged in Sections-16, 17 and 18 of the CGST Act, 2017 and Rules-36, 37, 40, 41 and 42 of the CGST Rules, 2017.

Summary

Issues Involved:
1. Determination of the liability to pay tax on sales of LPG gas sold in bottles to commercial and domestic customers.
2. Eligibility to claim the entire Input Tax Credit (ITC) at 18% on purchases of LPG gas (bulk) through tanker.

Issue-wise Detailed Analysis:

1. Determination of the Liability to Pay Tax on Sales of LPG Gas Sold in Bottles to Commercial and Domestic Customers:

The applicant is engaged in purchasing LPG gas in bulk and refilling it into bottles of different capacities for commercial and domestic customers. The GST rates applicable are 18% for commercial customers and 5% for domestic customers.

The relevant GST rates are derived from Notification No.01/2017-Central Tax (Rate) dated 28.06.2017. According to Schedule I of the notification, LPG supplied to household domestic consumers or non-domestic exempted category (NDEC) customers by specific public sector companies (Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., or Bharat Petroleum Corporation Ltd.) attracts a GST rate of 5%. However, the applicant is purchasing LPG from a private company, M/s Aegis Gas (LPG) Private Limited, and not supplying to NDEC customers. Therefore, the LPG supplied by the applicant does not fall under Schedule I.

Instead, the LPG sold by the applicant to commercial and domestic customers in bottles of various capacities (21 kgs., 17 kgs., 15 kgs., and 12 kgs.) falls under Sr.No.453 of Schedule III of the same notification, attracting a GST rate of 18% (9% SGST + 9% CGST).

Additionally, Notification No:06/2018-Central Tax (Rate) dated 25.01.2018 amended the earlier notification, specifying that LPG supplied to household domestic customers would attract a GST rate of 5% (2.5% SGST + 2.5% CGST) from 25.01.2018 onwards. Therefore, the LPG sold by the applicant to domestic customers would attract 18% GST up to 24.01.2018 and 5% GST from 25.01.2018 onwards.

2. Eligibility to Claim the Entire Input Tax Credit (ITC) at 18% on Purchases of LPG Gas (Bulk) Through Tanker:

The applicant seeks to confirm whether they are eligible to claim the entire ITC at 18% on the bulk purchases of LPG gas. The provisions related to ITC are detailed in Sections 16, 17, and 18 of the CGST Act, 2017, and Rules 36, 37, 40, 41, and 42 of the CGST Rules, 2017.

Section 16(1) of the CGST Act, 2017, entitles a registered person to take credit of input tax charged on any supply of goods or services or both used in the course or furtherance of business, subject to conditions and restrictions. Section 17(1) and (2) restricts ITC to the extent it is attributable to taxable supplies and business purposes. Section 18 provides conditions for claiming ITC in special circumstances.

The rules further elaborate on documentary requirements, conditions for claiming ITC, and reversal of ITC in case of non-payment of consideration. Rule 42 specifically deals with the determination of ITC in respect of inputs or input services used partly for business and partly for other purposes or for effecting exempt supplies.

Based on these provisions, the applicant is eligible to claim the entire ITC at 18% on the bulk purchases of LPG gas, provided they comply with the conditions and restrictions specified in the aforementioned sections and rules.

Ruling:

1. The applicant is liable to pay 18% GST (9% SGST + 9% CGST) on the LPG sold to commercial customers. For domestic customers, the applicant is liable to pay 18% GST up to 24.01.2018 and 5% GST from 25.01.2018 onwards.
2. The applicant is eligible to claim the entire ITC at 18% on purchases of LPG gas in bulk through a tanker, subject to the fulfillment of conditions and provisions specified in Sections 16, 17, and 18 of the CGST Act, 2017, and Rules 36, 37, 40, 41, and 42 of the CGST Rules, 2017.