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TMI Blog2024 (3) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... fer from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the SGST Act, 2017. 1. This Appeal has been filed by Chanchai Saha (hereinafter referred to as "the Appellant") on 26.08.2023 against Advance Ruling Order No. 09/WBAAR/2023-24 dated 26.06.2023, pronounced by the West Bengal Authority for Advance Ruling (hereinafter referred to as the WBAAR'). 2. The appellant is an entity engaged inter-alia in the trade of Super Kerosine Oil, hereinafter also referred to as SK Oil, as a holder of license issued by the Government of West Bengal, authorizing him as a "Dealer" as defined under Kerosene Control Order, 1968. 3. The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as "the GST Act") on the following questions:- (i) Whether the applicant being a Fair Price Shop as defined under the Notification No. 2565/FS/FS/Sectt/Sup/4M-16/2014 dated 3rd November 2014 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned Advance Ruling dated 26.06.2023 with a prayer to set aside the said order along with the consequential relief; to grant personal hearing; and to pass such further order or orders as may be deemed fit and proper in the facts and circumstances of the case. 7. The appellant has primarily cited the following points in their grounds of appeal:- (i) That the AAR acted arbitrarily in passing the order without looking into the records in the file. (ii) That the AAR, while deciding against the most crucial and primary question of the application bearing question no. 1, had erred in ruling that the appellant is not making any supply to the State Government and therefore, no tax is to be charged to the State Government. (iii) That the AAR while interpreting the Section 2(93) of the said Act, had erroneously interpreted that the applicant is engaged in supplying S.K. Oil to the ration card holders as the monetary consideration against the sale of S.K. Oil is received from the ration card holders only, who are purchasing the S.K. Oil from the appellant's fair price shop and that no other monetary or non-monetary consideration is received for these transactions. (iv) That the AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider that "the person liable to pay the consideration" cannot always be equated with the person who is paying the consideration, when the definition of "consideration" under Section 2(31) of the said Act itself has kept a room for payments to be received by the recipient or by any other person. (v) In response to a query regarding ownership of the goods i.e. S. K. Oil the appellants' representative stated that the appellant retains ownership of the goods subsequent to their receipt from the 'agents' and prior to their sale to the ration card holder. (vi) The appellant, in their argument, referenced the Order dated 30.12.2021 issued by the Authority for Advance Ruling, Tamil Nadu, in respect of the application filed by M/s. Handloom Weavers Co-operative Society Ltd. 10. Discussion and Findings: 10.1 A concise summary of the appellant's submission is as follows:- (i) The appellant is a Dealer in whose name a license to sell S.K. Oil to ration card holders under the Public Distribution system has been issued by the DCG of Balurghat Municipality, Dakshin Dinajpur. (ii) The territorial jurisdiction within which the applicant can supply the S.K. Oil is fixed by the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under the Notification No. 2565/FS/FS/Sectt/Sup/4M-16/2014 dated 3rd November 2014 issued by the Government of West Bengal, is liable to charge GST from the State Government against the supply made by them? (ii) Whether the other charges like Dealer's commission, Dealers Transport Charges, Stationery Charges, H&E Loss etc. would be chargeable to GST or treated as exempt? (iii) Whether the supply of "S.K. Oil" along with charges would be treated as a composite supply wherein the principal supply would be the supply of "S.K. Oil"? 10.4 Before entering into the issues of this appeal, the issue of PDS is required to be addressed. The Public Distribution System (PDS) is an initiative to distribute food and non-food items to the poor people of our country at subsidised rate and has been established by the Government of India under the Ministry of Consumer Affairs, Food and Public Distribution. Additionally, it facilitates the regulation of open market prices for commodities that are disseminated via the system. Furthermore, the PDS eliminates the inconsequential disparity between consumer products supply and demand. Presently, the PDS has been replaced by the Targeted Public D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on System by an order issued under Part III;]; b) "Fair Price Shop" means a shop engaged and licensed under this Control Order for distribution of public distribution commodities against ration documents; c) "Public distribution commodity" means such commodities from the list of essential commodities as may be declared to be public distribution commodity by the State Government and distributed from fair price shops, licensed under this Order; d) "Public Distribution System" means a system for distribution of public distribution commodities to the holders of ration documents through the Fair Price Shops; (ii) The appellant has been issued with a license for a dealer in kerosene under the Kerosene Control Order, 1968, which has been renewed till date and the appellant, as on date is selling S. K. Oil in terms of the said license; (iii) The West Bengal Kerosene Control Order, 1968, as amended vide Notification No. 2565/FS/FS/Sectt/Sup/4M-16/2014 dated 03.11.2014, however, provides definitions, as below: a) "Dealer" means a person or a registered Co-operative Society or a registered Self-Help Group in whose name a license to sell S. K. Oil to ration card holders under the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dealers and the retail price of S. K. Oil at which the Dealers will sell S. K. Oil to the consumers has been fixed. It is seen that as per the said Memorandum, the dealer's price includes, components like 'Dealer's Commission', Dealer's Transport Charges', Dealer's Stationery Charges' and "Compensation for Handling and Evaporation loss' are included in the price selling price of the 'Agent' to arrive at the MRP of the S.K. Oil. (v) It therefore appears that the price at which the appellant will sell S. K. Oil to the Ration Card Holder is not only fixed by the State Government rather the Government is also making provisions for different charges and compensations for the appellant by way of including components like 'Dealer's Commission', Dealer's Transport Charges', Dealer's Stationery Charges' and "Compensation for Handling and Evaporation loss' in the Dealer price of S. K. Oil. Even more, it is seen that the Government itself has termed one such components of valuation as 'Commission', indicating that the appellant is acting as an agent in the process of selling S. K. Oil to the holders of Ration Cards. (vi) In reaching a decision regarding this matter, it is imperative to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow, while reviewing this issue in deciding on the appeal file by the appellant, the following points are observed: (i) The entry 11B of Notification No. 12/2017-Central Tax (Rate) dated 28/06/2017 (as amended) is as below: 11B Heading 9961 or Heading 9962 Service provided by Fair Price Shops to State Governments or Union territories by way of sale of kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin. NIL NIL (ii) From the very language of this Notification, it is quite clear that Fair Price Shops those are providing service to State Governments or Union territories by way of sale of kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin, are eligible for the benefit of this notification. (iii) In this regard, The Government's rationale for issuing this Notification may also be considered upon in light of this. The main objective of the Fair Price System, as discussed above, is to distribute food and non-food items to the poor people of our country at subsidised rate, to upheld the 21st Article of the Indian Const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke Dealer's commission, Dealers Transport Charges, Stationery Charges, H&E Loss etc. would be chargeable to GST or treated as exempt? 10.16 As already discussed, the appellant's sale price included components such as dealer's commission, dealer's transport charges, stationery charges, Compensation for Handling and Evaporation loss, among others, in order to guarantee a reasonable return on the capital invested and are actually Commission received by the appellant from the State Government. The government is able to regulate the price of S. K. Oil disseminated via PDS by granting these terms in this manner. In terms of Chapter 4 of the GST Rules, The value of supply of goods between the principal and his agent shall- (a) be the open market value of the goods being supplied, or at the option of the supplier, be ninety per cent, of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person, where the goods are intended for further supply by the said recipient. However, this query becomes redundant in terms of the discussion made in Para-10.15. 10.17 Regarding the third query of the appellant to the effect whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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