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Issues: (i) Whether diesel and petrol charges invoiced separately on a per-kilometre basis are liable to GST or to VAT/other pre-GST levies; (ii) Whether the fuel component, when invoiced distinctly and not bundled with services, can be treated as part of a composite supply; (iii) Whether input tax credit is available in respect of VAT paid on petrol/diesel.
Issue (i): Whether diesel and petrol charges invoiced separately on a per-kilometre basis are liable to GST or to VAT/other pre-GST levies.
Analysis: Article 279A assigns the GST Council the power to recommend the date for levy of GST on specified petroleum products. Section 9(2) of the Central Goods and Services Tax Act, 2017 contemplates that GST on petroleum products shall apply from a date notified by the government. Petroleum products including petrol and diesel are not presently leviable to GST under the statutory scheme; therefore such products remain subject to pre-GST levies including central excise and state VAT.
Conclusion: GST is not leviable on diesel and petrol charges at present; such charges remain subject to pre-GST taxation (including VAT) in accordance with existing law.
Issue (ii): Whether the fuel component, when invoiced distinctly and not bundled with services, can be treated as part of a composite supply.
Analysis: Composite supply under Section 2(30) of the Central Goods and Services Tax Act, 2017 requires that all component supplies be taxable supplies and that one supply be the principal supply. A taxable supply is one leviable to tax under the Act (Section 2(108)). Since petrol and diesel are not leviable to GST currently, the essential requirement that component supplies be taxable is absent; accordingly the statutory definition of composite supply cannot be invoked to treat the fuel component as part of a composite supply for GST purposes.
Conclusion: The transaction cannot be treated as a composite supply under the CGST Act; the concept of bundled services is not applicable to the fuel component in the present facts.
Issue (iii): Whether input tax credit is available in respect of VAT paid on petrol/diesel.
Analysis: Sections 16 and 17 of the Central Goods and Services Tax Act, 2017 set out conditions and restrictions for availment of input tax credit under GST. VAT is a pre-GST state tax and does not constitute input tax credit under the CGST framework; the statutory scheme does not permit ITC for VAT paid on supplies not leviable to GST.
Conclusion: Input tax credit is not available on VAT paid in respect of petrol/diesel.
Final Conclusion: On the limited facts and materials before the Authority, petrol and diesel charges invoiced separately are not subject to GST at present and remain taxable under the pre-GST regime (including VAT); the fuel component cannot be subsumed into a composite supply for GST purposes and VAT paid on such fuel is not eligible for input tax credit under the CGST provisions.
Ratio Decidendi: Petroleum products (including petrol and diesel) are not leviable to GST until the government notifies a date under Section 9(2) of the Central Goods and Services Tax Act, 2017 upon recommendation of the GST Council; therefore supplies involving such products cannot satisfy the statutory requirements of a composite supply under Section 2(30) and VAT paid on such products is not eligible for input tax credit under Sections 16 and 17 of the Central Goods and Services Tax Act, 2017.
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