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TMI Blog2022 (4) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... garded as a fair price shop or not. It appears that a fair price shop is licensed to sell public distribution commodities against ration documents i.e., a fair price shop supplies S.K.Oil, along with other public distribution commodities, to the ration card holders only? - HELD THAT:- The applicant cannot be regarded as a fair price shop . Since the entry serial number 11A of Notification No. 1498-FT dated 22.08.2017 [Central Notification No. 21/2017-Central Tax (Rate) dated 22.08.2017] specifically refers supply of services provided by Fair Price Shops (FPS) and the applicant doesn t qualify to be a fair price shop , the applicability of the other aspects of the supply as referred to in the said entry are not discussed, i.e., (i) whether the applicant is supplying services to State Government or (ii) whether the applicant receives consideration in the form of commission or margin - the observation of the officer concerned from the revenue, cannot be accepted that the applicant is merely recovering the commission which he is eligible to earn from the IOCL in his capacity of an agent . In the instant case, the applicant admittedly charges, other than price of kerosene, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression GST Act would mean the CGST Act and the WBGST Act both. 1.2 The applicant is an agent of Indian Oil Corporation Limited (IOCL) and is engaged in the distribution of Superior Kerosene Oil (SKO) for domestic purposes to fair price dealers. The applicant supplies the goods only to dealers which are permitted / approved by the Director of Consumer Goods, Department of Food and Supplies, Government of West Bengal. Further, the price at which the applicant can supply as an agent along with the elements of such prices are also fixed by the District Controller, Food and Supplies, Government of West Bengal. 1.3 Entry serial number 11A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) exempts service provided by Fair Price Shops to Central Government, State Government or Union territory by way of sale of food g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Control Order, 1968. Para 5(iv), 5A and 5B (iii) of the said order reads as follows: Para 5(iv): No Agent shall sell, supply or transfer Kerosene to any person other than an S K Oil Dealer duly licensed under Paragraph 6 of this order or a holder of Permit issued under Paragraph 11 of this order Para 5A: Every agent after having allocation of S K Oil made by the DCG for distribution to S K Oil dealers shall take delivery of allocation from the concerned Oil Marketing Company. While making an allocation, the DCG shall consider the weekly or fortnightly requirements of the concerned agent on the basis of ration cards tagged and scales of distribution of S K Oil as may be fixed by the State Government from time to time and balance stock in hand . Para 5B(iii): The Agent shall not charge any excess price other than the fair price fixed by the State Government from time to time and shall issue a cash memo against sale of S K Oil to the Dealers . 2.3 Thus, the applicant can supply the goods only to dealers which are permitted / approved by the Director of Consumer Goods, Department of Food and Supplies, Government of West Bengal. Further, the price at which the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal supply needs to be reviewed in order to determine taxability of other charges. 2.8 The applicant contends that supply of kerosene oil and other charges like transport, commission, stationery, H E Loss etc. are naturally bundled in the ordinary course of business. Since there are two or more taxable supplies, this would be treated as a composite supply and the principal supply would be supply of Superior Kerosene Oil in the given case as it constitutes the predominant element of the composite supply. Therefore, rate of tax applicable on other charges would be the same as that on Superior Kerosene Oil i.e. 5% and other charges cannot be treated as exempt. 2.9 However, if the other charges are treated as exempt, ITC reversal under Rule 42 would only be attracted on the common input and input services since procurement of Superior Kerosene Oil from IOCL would be treated as fully attributable to the taxable supply i.e. supply of SKO to the Fair Price shops. It would not be attributable towards other charges recovered. Since it is attributable only towards taxable supplies and not exempt supplies, ITC reversal under Rule 42 should not be attracted on the procurement of SKO fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of dealer given in para 3(h) of the West Bengal Kerosene Control Order 1968, which reads as follows: dealer means an individual person, or a registered partnership firm, or a registered Cooperative Society, or a Sangha or mahasangha of Self-Help Group working within a district in whose name a licence to sell S.K Oil under the Public Distribution System has been issued under clause 6. 2.18 The applicant argues that the above-noted definition speaks that licence to sell S.K Oil under the Public Distribution System is to be granted under clause 6 of the West Bengal Kerosene Control Order 1968 so as to qualify as a dealer. However, the applicant has been granted the license under Para 5 of the said order. 2.19 According to the applicant, he satisfies definition of Agent mentioned under Para 3(b) of the West Bengal Kerosene Control Order 1968: Agent means a person who executed an agreement with the concerned Oil Marketing company and has been granted a license under paragraph 5 of this order as an agent in West Bengal authorizing him / her to carry on trade in Kerosene as such agent 2.20 The applicant is concerned that if GST is applicable on other ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od items through PDS is a function entrusted to Panchayat under Article 243G of the Constitution of India and entrusted to a municipality under Article 243W of the Constitution of India. 3.2 From the submission made by the petitioner before the Advance Ruling authority, it appears that the petitioner can sale SKO at the rate fixed by the District Controller, Food and Civil Supplies, Nadia, Govt of W.B. which is the same rate at which the applicant is procuring SKO from IOCL as an agent of the said Oil Marketing Company. Section 2(5) of the CGST Act, 2017/ WBGST Act,2017 states that agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another. 3.3 Section 15(2) (c) speaks that value of supply shall include any 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 supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 1498-FT dated 22nd August 2017 of the Finance Department (Revenue), Government of West Bengal read with Notification No. 21/2017- Central Tax (rate) dated 22nd August 2017 to state that the tax rate would be NIL for both Central and State GST in respect of following: Service provided by Fair Price Shops (FPS) to State Government by way of sale of kerosene, sugar, edible oil etc. under Public Distribution System (PDS) against consideration in the form of commission or margin . 4.4 However we do not find any reference of the said order in the memo dated 01.10.2021 issued by the District Controller (F S), Nadia (photocopy of the memo has been submitted by the applicant) on the subject matter of Revised retail price of S.K.Oil w.e.f. 01.10.2021. 4.5 We first take the issue to decide whether the exemption provided in the above-referred notification is applicable to the supply made by the applicant in the instant case. Since the said exemption is only in respect of services provided by Fair Price Shops to State Government , it is imperative to determine the following criterion: Whether the applicant can be regarded as a fair price shop; Whether the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a fair price shop . Since the entry serial number 11A of Notification No. 1498-FT dated 22.08.2017 [Central Notification No. 21/2017-Central Tax (Rate) dated 22.08.2017] specifically refers supply of services provided by Fair Price Shops (FPS) and the applicant doesn t qualify to be a fair price shop , we refrain to discuss on applicability of the other aspects of the supply as referred to in the said entry i.e., (i) whether the applicant is supplying services to State Government or (ii) whether the applicant receives consideration in the form of commission or margin. 4.13 According to the rate chart fixed by the District Controller, Food and Supplies, Nadia, Government of West Bengal, the applicant supplies S.K. Oil to dealers and issues invoices where tax is charged only on the base price of Kerosene although the applicant receives consideration in respect of other elements like agent s commission, agent s transport charges, stationery charges, compensation on handling evaporation loss. 4.14 The officer concerned from the revenue has submitted that though the applicant is charging commission to PDS dealers, he is merely recovering the commission which he is eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore cannot accept the observation of the officer concerned from the revenue that the applicant is merely recovering the commission which he is eligible to earn from the IOCL in his capacity of an agent . 4.19 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. 4.20 We are, therefore, of the view that the other elements involved in the instant supply shall not qualify for exemption. Therefore, the amount received by the applicant in this regard 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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