Recipient-supplied diesel forms part of freight value for GST when incurred in relation to the transportation supply.

Diesel supplied by the service recipient for use in the transporter's vehicles was treated as part of the freight value because it was integral to the transportation arrangement and incurred in relation to the taxable supply. The ruling applied the valuation rule that amounts the supplier is liable to pay in relation to the supply, but which are incurred by the recipient and not included in the price paid or payable, must form part of the value of supply. On that basis, the diesel cost was includible in the taxable freight value and GST applied on the total amount, including diesel.

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Issues: Whether diesel supplied by the service recipient for use in the transporter's vehicles in the course of transporting cement/clinker is to be included in the freight value for levy of GST.

Analysis: The ruling proceeded on the basis that the recipient's supply of diesel was an integral part of the transportation arrangement and was incurred in relation to the taxable supply. Section 15(2)(b) of the Central Goods and Services Tax Act, 2017 requires inclusion in the value of supply of any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient and not included in the price actually paid or payable. The definition of consideration under section 2(31) of the Central Goods and Services Tax Act, 2017 and the scope of supply under section 7(1) of that Act supported inclusion of such value in the taxable amount.

Conclusion: Diesel cost supplied by the recipient was held includible in the freight value, and GST was payable on the total freight amount inclusive of the diesel cost.

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