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of <h1>Diesel costs for DG set rentals must be included in supply value under Section 15 CGST Act 2017</h1> <h3>In Re: M/s Tara Genset Engineers (Regd.),</h3> The AAR held that diesel costs incurred for running DG sets in rental services must be included in the value of supply under Section 15 of CGST Act, 2017. ... Valuation - inclusion of cost of the diesel incurred for running DG Set in the Course of Providing DG Rental Service - diesel is a non-GST or not - HELD THAT:- The price of the Diesel i.e. the fuel, to run the DG Set, shall form part of value of supply in view of Section 15 of the CGST Act, 2017, as for the purpose of levy of GST, cost of all the inputs, has to be included in the value of supply - This authority has taken the similar view in IN RE: M/S GURJINDER SINGH SANDHU, (PROPRIETOR M/S. NEW JAI HIND TRANSPORT SERVICE) [2022 (10) TMI 911 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND]. Thus, the consideration for reimbursement of expenses, as cost of the diesel for running of the DG Set, is nothing but the additional consideration for the renting of DG Set and attracts GST @ 18% under the provisions of Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017. Issues Involved:1. GST applicability on the reimbursement of diesel cost incurred for running DG Set in the course of providing DG rental service.Issue-wise Detailed Analysis:1. GST Applicability on Reimbursement of Diesel Cost:The applicant, a partnership firm engaged in renting DG Sets, sought an advance ruling on whether GST is applicable on the reimbursement of diesel cost incurred for running the DG Set. The applicant has been charging and collecting GST at 18% on both the DG Set hiring charges and the reimbursement of diesel cost.The recipient of the service contested this, arguing that diesel, being a non-GST good as per Section 9 of the CGST/SGST Act, 2007, should not attract GST. The applicant sought clarity on whether the reimbursement of diesel cost should be subject to GST.Legal Provisions and Interpretation:The authority examined Section 15 of the CGST Act, 2017, which defines the value of taxable supply. It mandates that the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services.The authority emphasized that the diesel cost is an integral part of the DG Set rental service. Without diesel, the DG Set cannot function, making the diesel cost inseparable from the rental service. The reimbursement of diesel cost is considered an additional consideration for the DG Set rental service.Precedents and Rulings:The authority referenced similar rulings, including the Karnataka Authority for Advance Ruling in the case of M/s. Goodwill Autos, which held that the cost of diesel for running DG Sets is additional consideration for the rental service and attracts GST at 18%. Additionally, similar views were upheld in the cases of M/s Gurjinder Singh Sandhu and M/s Vinayak Air Products Pvt Ltd.Conclusion:The authority concluded that the reimbursement of diesel cost for running DG Sets is subject to GST at 18% as per Section 15 of the CGST Act, 2017. The diesel cost forms part of the value of supply for the rental service, and thus, GST is applicable.Ruling:GST at 18% is applicable on the cost of diesel incurred for running DG Sets in the course of providing DG rental service as per Section 15 of the Central Goods and Services Tax Act, 2017, and the Uttarakhand Goods and Services Tax Act, 2017.
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