Fair price shop's subsidized kerosene supply to ration card holders doesn't qualify for GST exemption under Notification 12/2017

AAR, West Bengal ruled that a fair price shop's supply of subsidized kerosene to ration card holders does not qualify for GST exemption under entry 11A of Notification No. 12/2017-Central Tax (Rate). The Authority held that while the applicant operates as a licensed fair price shop, it supplies goods directly to ration card holders who pay consideration, not services to the State Government. The transaction constitutes supply of goods to ration card holders with dealer commission included in the sale price, making the exemption inapplicable.

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Issues Involved:
1. Liability to charge GST from the State Government for supply made by a Fair Price Shop.
2. GST applicability on other charges like Dealer's commission, Dealer's Transport Charges, Stationery Charges, H & E Loss.
3. Classification of the supply of "S.K. Oil" along with charges as a composite supply.

Summary:

Issue 1: Liability to Charge GST from the State Government
The applicant, a Fair Price Shop licensed under the West Bengal Kerosene Control Order, 1968, sought clarification on whether GST should be charged from the State Government for supplies made. The Authority ruled that the applicant is not making any supply to the State Government. The supply is made to ration card holders, who pay the consideration. Therefore, no tax is to be charged to the State Government.

Issue 2: GST Applicability on Other Charges
The applicant questioned whether charges such as Dealer's commission, Dealer's Transport Charges, Stationery Charges, and H & E Loss are liable to GST or exempt. The Authority concluded that these charges form part of the value of supply of S.K. Oil and are subject to GST as per Section 15 of the GST Act.

Issue 3: Classification as Composite Supply
The applicant inquired if the supply of "S.K. Oil" along with other charges constitutes a composite supply with S.K. Oil as the principal supply. The Authority determined that the supply is not a composite supply but a single supply of goods (S.K. Oil) to ration card holders. Other charges are incidental expenses included in the value of supply, as per clause (c) of sub-section (2) of section 15 of the GST Act.

Ruling:
1. The applicant is not making any supply to the State Government; hence, no GST is to be charged to the State Government.
2. GST is applicable on other charges like Dealer's commission, Dealer's Transport Charges, Stationery Charges, and H & E Loss.
3. The supply of S.K. Oil along with other charges is not a composite supply; other charges form part of the value of supply.

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