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TMI Blog2024 (7) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... taxability of discount given on that value of taxable supply. In the instant case, the sale of petrol/diesel is not the supply under section 15 (3) as interpreted by the applicant. The taxable supply under discussion in the present matter is agreeing to the obligation to refrain from an act , for which a differential dealer margin is given by HPCL to the applicant. Though the consideration for this supply is linked to the sales volume of petrol, it is not a discount given on the supply of petrol. Hence, section 15 (3) of the Act is not applicable in the instant case. Further, in view of the above, GST Circular 29/2019 (F 17(134) AACT/GST/2017/4596 dtd 28-06-2019 cannot be cited as a reason for non-payment tax by the applicant. Rate of GST - HELD THAT:- There is no dispute that the applicant s supply of petrol/diesel to end customer is not taxable to GST. However, the supply in the present case is that of the service of agreeing to the obligation to refrain from an act. As per the Annexure: Scheme of Classification of Services annexed to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time, the service of Agreeing to refrain from doing an act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 of the GST Act. 4.2. The applicant submits that Differential Dealer Margin is credited to the account of the applicant by HPCL on the basis of the volume of sales of Petrol/ Diesel which is not treated as a taxable supply under GST on the reason that it is only an incentive given after the supply has been effected, and it is established in terms of an agreement entered into at or before the time of such. supply and specifically linked to relevant invoices as provided under Sec. 15 (3) (b) (i) of the CGST Act. 4.3. The applicant further submits that as per Sec. 9 (1) of the CGST Act, 2017, tax is levied on the supply of goods or services on the value determined u/ s. 15. The scope of supply as defined u/s. 7 (1) (a) of the CGST Act, 2017 includes the supply of goods or services or both by way of sale or services made or agreed to be made for a consideration. 4.4. The applicant submits that as a condition in the contract, the original price for the sale of Petroleum Products varies subsequently to account/ adjust for the discounts/incentives on achieving certain targets or conditions. Hence such discounts/ incentives are said to reduce the original price payable by the Retail out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 471 (AAR-WB) clarified the issue, it is held that petroleum products are non-taxable supplies and input credit is not available. As a corollary any incentive/differential price received related to petroleum products is also non-taxable. Similar finding seen in MEENA SERVICE CENTRE VS ASST COMMR, CGST 2020 TAX PUB (GST) 1325 (CIT-JP) wherein it is held that the Licence Fee paid by the recipient dealer to the supplier M/s. Indian Oil Corporation does not fall under the definition of inputs as provided under section 2(59) of CGST Act, 2017. Further, also Licence Fee is not an input for the outward supply of lubricants, Distil water and PUC (pollution under certificate). 4.9. Finally the applicant concludes that from the aforesaid propulsions. judgments and findings from Advance Ruling Authorities and Courts, the Differential Dealer Margin received by the applicant on the sale of Petroleum products which are not coming under the provisions of GST Act may not he treated as a supply of service taxable under GST. 5. Comments of the Jurisdictional Officer: The application was forwarded to the jurisdictional officer as per provisions of Section 98 (1) of the CGST Act. The jurisdictional of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence taxable to GST. Hence, we are of the opinion that the first reason cited by the applicant for nonpayment of tax is not valid, Further, in view of the above, Circular 29/2019 (F 17(134) AACT/GST/20I 7/4596 dtd 28-06-2019 cannot be cited as a reason for non-payment tax by the applicant. 7.4. Further CBIC New Delhi vide para No: 6 of its Circular No. 178/ 10/2022-GST dated 03,08.2022 clarified that there must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration . In the instant case HPCL provides the differential margin based on the agreement and the consideration is related to the decrease in sales volume. Differential dealer margin is given only to a dealer and not to the general public. The amount will not be paid if the applicant s sales volume touches the agreed limit or if the applicant winds up his business. 7.5. The second reason cited by the applicant is that differential dealer Margin is only an incentive given. after the supply has been effected, and it is established in terms of an agreement entered into at or before the time of such. supply and specifically linked to relevant invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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