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TMI Blog2021 (1) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... providing Goods Transport service without having any obligation or responsibility towards fuel / fuel cost is inconceivable. Cost of Fuel is definitely a consideration for the said supply as per the definition of consideration supra, in the course of furtherance of business and forms the most vital part in the intended supply of goods transport service by a GTA. Goods Transport Agency or GTA provides service in relation to transport of goods by road and to perceive provision of this service without the element of fuel, can in no way be a logical or workable proposition - if the proposed concept of provision of free of cost diesel by the service receiver for the instant supply of service of transportation of goods by road that too unaccounted by the service provider CIA, is justifiable it becomes all the more inconceivable to visualize a situation when the service receiver would besides providing free of cost diesel would also be providing free of cost trucks/trailers for the instant supply. It is also seen that subsection (4) to Section 15 of the CGST Act, 2017 provides that where the value of the supply of goods or services or both cannot be determined under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the companies/parties (service recipient) and as per terms of contracts, High Speed Diesel (fuel) filled and consumed in the engaged dedicated (chartered) vehicles used for transportation under GTA service will be under the scope of the service recipient and freight is paid by the companies / parties, excluding diesel. The applicant thus seeks advance ruling on the above said points, considering that the diesel filled and consumed by the recipient company would not be included in the amount charged by the applicant in tax invoice issued under Section 31 of CGST Act, 2017. 3. Contentions of the applicant:- The applicant, is a GTA service engaged in providing services of transportation of goods by road and the applicant intends to enter into a contract with the service recipient for providing GTA services. As per the draft agreement, the applicant is required to provide trucks / trailers on a day to day requirement on a non-exclusive basis and as per the scope of service of the applicant is to provide the truck /trailer along with the driver and report at the unit of the service recipient. The fuel is in the scope of the service recipient and not in the scope of work of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such supply but which has been incurred by the recipient and not included in the price actually paid or payable. As the contractual liability of the fuel is not that of the applicant, cost of fuel cannot be included in the scope of supply made by the applicant. Further that it stands settled in service tax laws that value of diesel supplied free of cost by the client in the course of providing service, the said value cannot become part of GTA service. That, the matter is covered by circular no. 47/27/2018-GST dated 8.6.2018, wherein it has been clarified in case of tools, moulds and dies which are in the scope of buyer and are provided on FOC basis to the supplier for use in the manufacturing goods, then same will not form part of the transaction value and no GST will be payable thereon. VII. That, even otherwise the transaction is revenue neutral as service recipient is eligible to fake input tax credit of the GST charged by the applicant on the GTA service provided. However, in terms of section 15 (2) (b), it will be erroneous and contrary to law for the applicant to charge GST just because recipient is entitled to ITC. VIII. That, onus even if put on the applicant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 5.1 As per Section 7 (1) of CGST Act: For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 5.2 Section 2(31) of the CGST ACT, 2017 defines consideration as: Consideration in relation to the supply of goods or services includes (a) Any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is given- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. (4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.' (5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.8 Explanation .-For the purposes of this Act,- (a) persons shall be deemed to be related persons if- (i) such persons are officers or directors of one another's businesses; (ii) such persons are legally recognized partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) The monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: 5.5 In terms of the provisions of law as envisaged under Section 15 (1) of CGST Act, 2017, to ascertain as to whether the value of a supply of services is the transaction value, which is the price actually paid or payable for the said supply of services and as to determine whether the value of taxable supply paid by recipient to the supplier is the 'sole consideration , it is necessary to refer to the definition of the term 'consideration . The term 'consideration' has been defined under Section 2(31) of the CGST Act supra, to mean and include monetary value of any act or forbearance, whether or not voluntary which is made in respect of, in response to or for the inducement of the said supply of goods and/or services. Such consideration can flow from the recipient of supply or any other person and it could be either monetary or non-monetary consideration. Thus Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lings which declare that no mutual terms or conditions of a contract / agreement between two parties involved can override the statutory definition of law, so as to alter the nature of transaction perceived for non-payment of accruing tax liability. It will definitely not be out of context to mention here that in the intended transaction, the value of diesel will be charged as expense by the service receiver and will not go unaccounted in the books of accounts of the service receiver. Further the said provision of diesel to the applicant by the service receiver would definitely be treatable as an independent supply exigible to tax as applicable, had diesel not been out of the scope of levy under GST as of now. Thus, this also appears to be a cause to avoid incidence of tax on the value of the all important ingredient i.e. diesel (fuel), much necessary for the provision of the said service by the applicant GTA. This expenditure on account of Diesel charges in this case by the service receiver, is indispensable and inevitably incurred to provide taxable service and hence, essentially forms part of value of taxable service. Further if the proposed concept of provision of free of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portation service by GTA in question, as discussed above, cost of the same is the key and accordingly the most decisive and vital factor for arriving at the value for the supply in question. 5.6 We find that to bring home their point of contention that the value of diesel supplied free of cost by the client in the course of providing service cannot become part of GTA service, the applicant have cited reference to the case law of M/s Karamjeet Singh and Co. Ltd vs CCE 2017 (9) TMI 1125 CESTAT, M/s RK Transport Company vz CCE 2020(11)TMI CESTAT, New Delhi, UOI vs Intercontinental Consultants and Technocrafts Pvt Ltd 2018 (3) TMI 357 and Commissioner of Service tax vs M/s Bhayana Builders (P) Ltd 2018 (2) TMI 1325 SC. These case laws pertain to the erstwhile service tax period and that too prior to the negative list regime under Service tax provisions, governed by Finance Act, 1994. The case of Karmajeet singh pertains to the period 2008 to 2012, whereas the case of M/s RK Transport Company pertains to 2008 to 2010 and that of M/s Intercontinental Consultants pertains to the period 2002 to 2007. In the case of Karamjeet Singh the decision was based on pronouncement of Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract between OEM and component manufacturer was for supply of components made by using moulds/belonging to the component manufacturer, but the same has been supplied by the OEM to the component manufacturer on FOC basis, the amortized cost of such moulds / dies shall be added to the value of the components and that in such cases the OEM will be required to reverse the credit availed on such moulds / dies, as the same will not be considered to be provided by OEM to the component manufacturer in the course or furtherance of the former's business. In the case of supply of components, which is supply of goods and not service, unlike in this case it is to be noted that components manufactured for the Original Equipment manufacturer (OEM), are a teller made item and it is manufactured using moulds/die by the component manufacturer as per the specifications and design as required by the OEM, for its further use in the subsequent manufacture of Original equipment i.e. for the furtherance of business, whereas in the case of provisions of transportation service fuel is used by the GTA in his vehicle for provision of said transportation service. Further unlike fuel which gets consumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice recipient to the service provider mutually consenting for the same to be used for the process identified by SSIPL to advertise the subway brand /trade name. Hence it is not simplicitor on advertising service, but is very much the part of the franchise service rather than by the appellant to the franchisees. Hence, definitely qualify for for such service provided . From the above discussion, we are of the firm opinion that the amount of weekly gross sales @4.5% but for franchise advertisement fund is nothing but the part of the gross value of the contract for providing the franchise Service and, hence was equally taxable as 8.5% of the said weekly gross sales is taxable. Further in the aforesaid case, Hon'ble Tribunal distinguished the findings in Intercontinental consultants and technocrats Pvt Ltd supra, holding that Similarly, Intercontinental Consultants and Technocrats Pvt Ltd case supra is also not applicable in view of the above discussion about Section 67 of the Act in accordance whereof the valuation of taxable service is nothing more or nothing less than the consideration paid as quid pro quo for the service. As already discussed above even 4.5% of weekly gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot wholly in money, the value of such supply shall be the sum total of consideration in money and such further amount in money as is equivalent to the consideration not in money which is known at the time of supply. This also goes on to substantiate that the cost of diesel provided by service receiver is to be considered for arriving at the GST liability in such supply. 5.8 Thus on the basis of above discussions, we come to the considered conclusion that in the instant transaction by the applicant diesel filled free of cost by the service recipient in the engaged chartered (dedicated) vehicles would form part of value of supply of service charged by the applicant and accordingly GST at the applicable rate would also be leviable on value inclusive of the cost of diesel filled by the service recipient, under GTA service. 6. Having regard to the facts and circumstances of the case and discussions as above, we pass the following order:- ORDER (Under section 98 of the Chhattisgarh Goods and Services Tax Act, 2017) The ruling so sought by the Applicant is accordingly answered as under: RULING Cost of diesel filled by the service recipient in the engaged chart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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