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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 ..... dealers and the retail price of S. K. Oil at which the Dealers will sell S. K. Oil to the consumers, i.e. the Ration Card holders. (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 by the Government of West Bengal, is liable to charge GST from the State Government against the supply made by them? - The appellant in the present case, is a Fair Price Shop and is providing service to the State Government by way of distributing of S. K. Oil as agent, it decided that the afore-mentioned notification is applicable for the appellant and the appellant is entitled for the benefit extended by the said notification. Since, in terms of the said Notification, the Tax liability of the appellant while providing service to the State Government is NIL the question of charging GST from the State Government becomes inapplicable. (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? - Appellant s sale price included components such as dealer s commission, dealer s transport charges, statione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R/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 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 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 AAR had decided the instant ruling on some extraneous grounds without considering the facts of the instant case and giving any consideration to the submissions made by the appellant during the course of hearing. (v) The grounds of appeal also extensively deliberated on the appellant s submission before the AAR, encompassing topics such as the Essential Commodities (Amendment) Act, 2020, the definitions of agent and agency , and guideli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Government being the Balurghat Municipality, Dakshin Dinajpur. (iii) The appellant is obligated as a Dealer to comply with the provision of the West Bengal Kerosene Control Order, 1968, Notification No. 2567/FS/FS/Sectt/Sup/4M-16/2014 dated 03/11/2014 issued by the Department of Food and Supply, Government of West Bengal. (iv) The Area Inspector of the Consumer Goods Directorate issues the Allotment Order of S.K. Oil for Kolkata and Bidhan Nagar, whereas the SCFS/Inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal 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 Distribution System (TPDS), an initiative that the Central and State Governments collaborate to operate. The Targeted Public Distribution System (TPDS) was initiated by the Government of India with the intention of providing assistance to the impoverished. 10.5 In the present case, the appellant is a Dealer having license to sell S.K. Oil to ration card holders under the Public Distribution system. The appellant purchases S.K. Oil from agents of the Oil Companies who have an agreement with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution 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 Public Distribution System has been issued by an order under Para 6 of the Control Order, 1968; b) S. K. Oil Shop means a shop belonging to the S. K. Oil Dealer appointed and licensed under this Control Order for distribution of S. K. Oil to consumers having valid Ration Cards; (iv) Upon combinatory examination of the definitions presented in the aforementioned orders, it becomes apparent A dealer or Fair Price Shop Dealer under the West Bengal Public Distribution System (Maintenance Control) Order 2013 can be termed as a entity licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 take into account the comprehension of the general populace as well. As Public Distribution Commodity is more commonly known, Ration is widely acknowledged to be a government-provided benefit to the citizens of this nation. The Ration Shops, which we refer to as Fair Price Shops, are merely government-affiliated distributors of commodities. Therefore, it cannot be disregarded that the appellant is providing S. K. Oil to the Ration Card holders as an agent by estoppel. (vii) Furthermore, in this regard, we consult Section 3(C) of the Essential Commodities Act, as amended, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate 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 Constitution which says that No person shall be deprived of his life or personal liberty except according to procedure established by law . So, it has been a constant endeavour on behalf of the Government to ensure lowering of price of the essential commodities distributed through PDS. Thus, it appears that the government has extended this exemption benefit in order to relieve the tax burden on the population of India residing below the poverty line. And this benefit is to be extended to the poorer section of the society. (iv) As it has already been discussed above, that the appellant in the present case, is a Fair Price Shop a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 , a decision remains to be made. 10.18 Composite supply has been defined in section 2(30) as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply . 10.19 As previously discussed, and decided, the appellant makes a single supply of service as an agent to the State ..... X X X X Extracts X X X X X X X X Extracts X X X X
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