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TMI Blog2022 (10) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... (Proprietor M/s New Jai Hind Transport Service), 1st Floor, Shop Number 72, Avdhoot Mandal, Haridwar - 249407 (herein after referred to as the "applicant") and registered with GSTIN - 05EOFPS2375RIZ4 under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017. 2. In the application dated 02.07.2022, the applicant submitted that: They are in the process of discussion for providing transport of goods service by road to a recipient which is not a related person, for which consignment note will be issued by the applicant. As per the draft agreement they will have to transport the goods from the factory of the recipient to destination specified by the recipient by deploying vehicle with driver/staff to run/operate, for exclusive transport of their goods but the fuel required to transport the goods shall not be within the scope of work of the applicant and shall be borne by the recipient of the said service. Since the fuel (diesel) is not in the scope of the applicant as per draft agreement hence while charging GST at the applicable rate, on the freight consideration charged by them from the recipient under forward charge mechanism, cost of the fuel consumed/ used for tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022. Sh. Abhishek Anand, Advocate, Sh. Rahul Kumar, Advocate and Sh. Manohar, Accountant of the applicant firm, on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submission already made in their application. Sh. Deepak, Deputy Commissioner, Concerned Officer from the State Authority was also present during the hearing proceedings. He presented the facts and requested the authority to decide the case on merits. 7. From the record submitted by the applicant we find that applicant is registered in Uttarakhand with GSTIN bearing No. 05EOFPS2375RIZ4. Before proceeding in the present case, we would first go through the submissions made by the applicant on different dates, which are as under: 8. (a) GST is a contract-based levy- GST is leviable on the transaction/ contract entered between the parties within four corners of rights & obligation created by the parties under the agreement as held by the Hon'ble Gujarat High Court in the case of Mohit Minerals Pvt. Ltd v. UOI 2020 (1) TMI 974 and hence tax can only be levied on the (i) activity agreed between the parties under the contract & (ii) undertaken by parties falling within ambit & s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. Thus, under the agreement between the parties, freight charges are sole consideration & only price paid/payable for GTA Service by the applicant to the service recipient. In other words, freight charges are the transaction value or the contract price for the GTA service. Further, applicant & service recipient are not related to each other & entire transaction shall take place on principal-to-principal basis, therefore, only consideration exigible to GST shall be freight charges & nothing else. (d) Procurement of fuel is not contractual liability of the applicant -Section 15(2)(b) of the CGST Act states that transaction value shall include any amount that the supplier is liable to pay in relation to such supply but has been incurred by the recipient and not included in the price actually paid or payable for such goods or services and in the present case, the applicant and the service recipient are unrelated persons & as such the value for levy of GST shall be the freight charges i.e., the consideration agreed under the contract between the parties for the GTA services of the applicant. The value of fuel, which is owned by and falls under the contractual liability of the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble AAR Maharashtra in M/s Lear Automotive India Private Limited - 2018 (12) TMI 766 has also taken the above said view. 9. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed by the applicant for our consideration. Now we proceed by taking up the issue: 9.2 We find that the issue involved is of the valuation of the supply, hence for perspective Section 15 of the CGST Act, 2017 is reproduced below:- "15. Value of Taxable Supply.- (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include,- (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; (b) the term - persons also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed to be related". We observe that the section provides that the value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. 9.3 We further observe that it has been specifically mandated that the value of supply shall include (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; and (b) any amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component of moving of goods from one place to another and for this to undertake a vehicle in running condition, an operator etc. are required. The running condition of a vehicle cannot be achieved without the fuel, as in absence of fuel the vehicle cannot move from one place to another to transport the goods. We are of the opinion that to claim to provide the services of transporting the goods, actual transportation has to take place and without fuel this cannot happen. And if there is no transportation of goods due to absence of fuel or any other reason the same cannot be termed as "GTA service". At best the same can be termed as Rental or leasing service. 9.6 We also opine that without providing the fuel (being an integral component for performance of service) to operate and run the vehicle to transport the goods from one place to another but by merely issuing consignment notes, the service cannot be termed and classified as "GTA service", as the ingredient of transport of goods comes into play, when and only when the vehicle in running condition along with operator have been provided by the service provider. The running condition implies that all the upkeep, maintenance, oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Haridwar, Uttarakhand. 9.9 Further, we find that the applicant has contended that transaction is revenue neutral in nature, but we observe that this argument devoid of any merit as the dues to the Government are payable as per the provisions of the Act and cannot be set off. We also find that it has been contended that there is impossibility of compliance at the end of the applicant; we observe that in the CGST Act, 2017 there is no such provision. Moreover, cost price/procurement price of the fuel i.e. diesel in the instant case is open to all in the market and even the business houses, industries etc. consuming diesel for any of the reason, book the expenses incurred by them as per the norms of the industry. 9.10 In view of the above facts and discussion held above we hold that the value of free diesel filled by service recipient will be subjected to the charge of GST by adding the free value diesel in the value of GTA service, under the Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017. 10. In view of the discussions held above, we rule as under: RULING The value of free diesel filled by the service recipient in the vehicle(s) provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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