GST ruling: Toll charges included in supply value. Applicant not pure agent.

The ruling determined that toll charges reimbursed by clients were not to be excluded from the value of supply under Rule 33. GST was held payable on the entire value of the supply, including toll charges. The Applicant was not considered a pure agent while paying toll charges, as they were deemed part of the service cost provided to the banks. The ruling was deemed valid subject to provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.

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Issues:
- Chargeability of GST on Toll Taxes reimbursed by clients
- Ability to claim Toll Taxes as a deduction under Rule 33

Analysis:
1. Chargeability of GST on Toll Taxes reimbursed by clients:
The Applicant sought a ruling on the chargeability of GST on Toll Taxes reimbursed by its clients or the ability to claim it as a deduction under Rule 33. The Applicant provides security services to banks and transports cash/coins/bullion, incurring toll charges reimbursed by the client banks. The Applicant argued that toll charges should be excluded from the value of supply under Rule 33 as expenses incurred as a pure agent. However, the agreements with client banks did not specifically authorize the Applicant as a pure agent or acknowledge toll charges as their liability. The Applicant admitted to owning the vehicles and being the recipient of the service provisioned on payment of toll, making toll charges part of the cost of services provided to the banks. The reimbursement of toll charges was deemed not a disbursement but a recovery of a portion of the value of supply made to the banks, making the Applicant not a pure agent in this scenario.

2. Ability to claim Toll Taxes as a deduction under Rule 33:
Rule 33 of the GST Rules allows for the exclusion of costs incurred by a supplier as a pure agent of the recipient of supply from the value of supply under certain conditions. The rule defines a pure agent as a person who acts on behalf of the recipient, does not hold any title to the goods or services procured, does not use them for personal interest, and receives only the actual amount incurred. In this case, the Applicant failed to meet the criteria of a pure agent as the toll charges were deemed part of the service cost provided to the banks, and the Applicant was not acting as a pure agent while paying toll charges. Therefore, the toll charges were not to be excluded from the value of supply under Rule 33, and GST was held payable on the entire value of the supply, including toll charges paid.

In conclusion, the ruling stated that toll charges paid were not to be excluded from the value of supply under Rule 33, and GST was deemed payable at the applicable rate on the entire value of the supply, including toll charges paid. The Applicant was not considered a pure agent of the bank while paying toll charges, as the charges were deemed part of the service cost provided to the banks for the provision of security services. The ruling was declared valid subject to the provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.

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