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2023 (5) TMI 1066 - AAR - GSTQuantification of GST/Valuation of supply - GST on whole amount of bill (monthly rental night charges fuel on mileage basis) or only on monthly rental (excluding night charges fuel on mileage basis)? - HELD THAT - Section 15 of the CGST Act, 2017 mandates that the value of supply shall include among other things, any other amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both - the provisions of the Section 15 are very clear and in unambiguous terms it has been mandated that any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both. The use of words supplier is liable to pay in relation to such supply brings out the intent of the legislature and leaves no room for any doubt. Further, the term supply is defined in Section 7 of the CGST Act, 2017 and as per the provisions all forms of supply of goods or agreed to be made for a consideration is a part of supply. And the term consideration has been defined in Section 2(31) of the CGST Act, 2017 which mandated that consideration includes any payment whether in money or otherwise made or to be made or monetary value of any act or forbearance for the inducement of the supply of goods. The usage of the terms or otherwise and or forbearance for the inducement of the supply of goods or services or both, whether by the recipient , in the statute leaves no doubt about the spirit and essence of the Act. The contract entered between the applicant and the provider of services presented is for motor vehicle hire services, wherein the liability to arrange fuel and the maintenance of the vehicle, so deployed lies with the service provider and is a comprehensive contract with the consideration which varies depending upon the kilometer travelled. Hence, the reimbursement of expenses for providing said services, under any head is nothing but the additional consideration for the provision of said services and attracts GST on the total value. It is further observed that Karnataka Authority for Advance Ruling in the case of M/s. Goodwill Auto's, Hubbali; Dharwad 2021 (8) TMI 355 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA has held that the cost of the diesel incurred for running DG Set in the course of providing DG Rental Service is nothing but additional consideration for the supply of DG Set on rent as per section 15 of the GST Act. All the consideration including reimbursement of any kind shall form part of value of supply in view of Section 15 of the CGST Act, 2017 - the service provider has to charge GST on the whole amount of bill which in the instant case is monthly rental plus night charges and fuel on mileage basis. Service provider has to charge GST on the whole amount of bill i.e. monthly rental night charges fuel on mileage basis.
Issues Involved:
1. Determination of the liability to pay tax on services. 2. Valuation of the supply of services. Summary: Issue 1: Determination of the liability to pay tax on services The applicant, M/s Uttarakhand Public Financial Strengthening Project, sought an advance ruling on whether the service provider should charge GST on the whole amount of the bill (monthly rental + night charges + fuel on mileage basis) or only on the monthly rental (excluding night charges + fuel on mileage basis). The application was admitted under Section 97(2)(c) of the CGST/SGST Act, 2017. Issue 2: Valuation of the supply of services The applicant receives motor vehicle hire services including fuel charges from service providers M/s Baba Tour & Travel and M/s Rajeshwari Travel. While M/s Baba Tour & Travel charges GST @ 5% on the whole amount of the bill, M/s Rajeshwari Travel charges GST @ 5% only on the monthly rent component, excluding fuel charges. The applicant's agreement terms state that GST and cost of diesel will be reimbursed separately, and the second party shall arrange for fuel and maintenance of vehicles. The Authority for Advance Rulings examined the issue under Section 15 of the CGST Act, 2017, which mandates that the value of supply shall include any amount the supplier is liable to pay in relation to such supply but incurred by the recipient. The Authority observed that the supply of motor vehicle hire services inherently includes the cost of fuel as it is essential for the operation of the vehicle. Thus, the reimbursement of expenses for fuel is considered additional consideration for the provision of services and attracts GST on the total value. The Authority referenced previous rulings, including the Karnataka Authority for Advance Ruling in the case of M/s. Goodwill Auto's, which held that the cost of diesel incurred for running DG Set in the course of providing DG Rental Service is additional consideration for the supply. Ruling: The service provider has to charge GST on the whole amount of the bill, which includes monthly rental, night charges, and fuel on mileage basis.
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