Issues : Petrol Pump Dealers

[SHYAM PATHAK]

Dear Sir,

Petroleum retailers (Petrol Pump Operators) are selling Diesel, Petrol and Lubricants. All dealers are GST registered dealers. Dealers are paying LFR (Rent for using Licence, Machinery, Land etc) to Oil Marketing Companies (OMC). OMCs are charging SGST and CGST form dealers by raising TAX Invoices to dealers. Dealers are also selling lubricants (18% GST slab)

May dealer accumulate ITC paid on LFR after adjusting GST payable (lubricants), considering that components of lubricant sales is very nominal ?

Some Tax experts are saying that accumulation of ITC become very high and NOT possible to adjust in Current FY or something like that. Is this Statement has some Legal ground ?

AI Summary

Input tax credit accumulation may be restricted where non-GST fuel sales require proportionate reversal under GST apportionment rules.
Petrol pump dealers paying GST on licence or rent charges to OMCs may accumulate ITC in their electronic ledger, but ITC does not lapse automatically and is subject to utilisation limits and restricted refund routes. Where dealers make both taxable and exempt or non-GST supplies, ITC must be apportioned between taxable and non-taxable turnover and the portion attributable to exempt/non-GST supplies reversed, which can reduce or eliminate accumulated credit.