TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1103
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....ard 12, Suratgarh, 335804- Rajasthan. - (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (c) given as under: (c) Determination of time and value of supply of goods or service or both. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1.0 The Applicant i.e. Sunil Giri, (the Proprietor of M/s. Giri Transport Company) is a Goods Transport Agency ('GTA' for short) having its registered place of business at Swami Dharmashala, 12 Unnamed Road, Suratgarh, having GST Registration number 08CRBPG5309N1ZM. 1.1 The Applicant is about to enter into contract with its customer for providing service of transportation of goods by road. 1.2 In terms of the contract to be executed with the customer, the diesel to be consumed in providing the service of transportation of the goods is within the scope of the customer and/or is provided on free of cost basis. The said diesel required for the trip, will be filled in the truck deployed by the Applicant for the transportation, the parties have clear understanding that the said diesel shall be used/consumed exclusively for the transportation of goods belonging to the customer and that the....
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..... Considering that diesel is in the scope of the customer, nothing is chargeable by the Applicant from the customer for such diesel and no consideration for the diesel is paid or is payable by the Applicant to the customer and/or no adjustment from any amount payable to the Applicant is made / to be made by the customer. The payment against the service invoices are settled through bank transfer by the customer. APPLICANT'S INTERPRETATION OF LAW 1.0 In the above backdrop, it is the bona fide understanding of the Applicant that value of diesel, which is in the scope of the customer, and as filled in the vehicle by them is not required to be included in the value of freight charged by Applicant for the said transportation. The interpretation of law and/or of the facts in this context is explained hereinafter. 2.0 Diesel is to be filled in the trucks is in contractual scope of the customer; 2.1 In view of the above facts and the terms of the agreement diesel is in the scope of the customer and would be filled in the truck without any charge or cost. As explained in the facts enumerated hereinbefore, the Applicant does not have any obligation to provide diesel and is also not liable....
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....) .... (b) the value, apportioned as appropriate, of such goods and/or services as are supplied directly or indirectly by the recipient of the supply free of charge or at reduced cost for use in connection with the supply of goods and/or services being valued, to the extent that such value has not been included in the price actually paid or payable; ........" Considering that the above provision was deleted and did not find place in the enacted GST Act, 2017, it is clear that the legislature, in its wisdom, does not seek to levy GST on such free of cost goods/ services and hence the value of diesel provided free of cost to the trucks of the Applicant is not includible in the value of service provided by him. Vide additional submission dated 14.06.2022, the Applicant produced following written submissions in support of their application: 1. That the Applicant who is a GTA service provider is about to enter into an agreement/contract with service recipient for transport of their goods/material to specified locations/depots for captive consumption. The service recipient registered under GST laws is engaged in manufacturing activities and supply of goods exigible to GST. The ser....
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.... The fuel will be in the scope of the service recipient and the Applicant is not concerned, in any manner, with reference to the free of cost fuel. As succinctly mentioned in the draft agreement, the Applicant will be issuing consignment note for each vehicle load/consignment. The consignment note, inter-alia, will bear information such as the consigner, consignee, name of goods (raw material) being transported, quantity of material loaded for transportation and freight consideration. On completion of the transport service i.e. the successful delivery of raw materials to the service recipient, the applicant will raise invoice, charging freight for the GTA service provided. The invoice will carry the details of consignment notes for the GTA service provided. The Applicant will be accounting the freight charged from the service recipient as business revenue. Further the applicant will be charging GST (under forward charge mechanism) on the freight so charged. It is further to submit that the applicant will not be doing any accounting for the diesel filled in the truck by the service recipient as the same has not been provided to the applicant and also not being in the scope of th....
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....contract and also makes it clear that the law makers have purposely deleted the said provision while enacting the GST Act, 2017. This view also gets affirmed from the fact that both the draft GST law and enacted GST law in section 15 contain the provision "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 or both." 4. That furthermore, the provision relating to scope of supply is contained in Section 7 of CGST Act read with schedules thereto. FOC supply made without consideration has been included in the scope of supply vide Section 7(1)(c) read with the Schedule-I to the CGST Act. Perusal of the First Schedule makes it clear that FOC supply made between unrelated parties under the terms of contract are not taxable supplies. Further, in the present case, if the provision of section 15(2)(b) is seen which provides that "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" then it does not include FOC diesel for the simple reason that the liab....
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....ue of FOC goods provided by recipient of supply shall not be includible if the service provider (Supplier) is not "liable" for the same. 6. That furthermore, the present Applicant relies on various judgments (copies supplied separately) which though pertains to the service tax era but are on the same issue in relation to FOC diesel and other items by service recipient for GTA service and hence will squarely apply to the issue under consideration. In these decisions, the Courts adjudged the argument that diesel is an essential input with finding that FOC diesel cannot be added in the value of service.- * Commissioner of Central Excise vs. Bhayana Builders (P) Ltd., 2018 (2) TMI 1325 (SC). * Jain Carrying Corp. vs. CCE, Jaipur (2019) (3) TMI 864 * RK Transport Co. vs. CCE, Raipur, 2020 (11) TMI 034 * Heligo Charters vs. CCE, Mumbai, 2020 (4) TMI 182 * Ganpati Asso. Vs. CCE, Jaipur, 2019 (5) TMI 1233 * Karamjeet Singh & Co. Ltd. vs. CCE & ST (2013 (12) TMI 434) * Shree Logistics Pvt. Ltd. VS CCE Udaipur [2017(11) TMI 1464] * Ganpati Associates Vs CCE, Jaipur [2019 (5) TMI 1233] * Munshi Lal Durga Prasad Vs CCE Jaipur [2019 (5) TMI 1233] * TCL MMPL Consortium Vs CC....
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....dated 08.06.2018 and decisions passed in Lear Automotive (supra) and Nash Industries (supra) wherein section 15(2)(b) of CGST Act stands interpreted. Further, interpretation of section 15(2)(b) has not been dealt in this matter. For, all of the above, advance ruling given in the matter of Shri Navodit Agarwal is inapplicable for the present purposes. 9. That lastly, at the cost of repetition, it is submitted that the FOC diesel is not 'consideration' for the Applicant as the diesel is not supplied to him but the diesel would be filled in the fuel tank of the trucks/trailers that would be engaged by the service recipient, at their own location and that too after loading the goods and it can be used only for transporting the goods of service recipient. In this regard, the Board Circular 47/27/2018 though in a different context but relevant to the present issue, has clarified that the Moulds and dies provided on FOC basis by the recipient of supply is not consideration. The Board circular has been relied upon by AAR Maharashtra in its advance ruling GST ARA-19/2018-19/B-80 dated 31.07.2018 given in case of M/s. Lear Automotive India Private Limited (copy supplied separately). In thi....
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....mmissioner, State Tax, Circle Suratgarh vide letter dated 04.06.2022 are as under:- 1. Mr. Sunil Giri (applicant), is the Proprietor of M/s. Giri Transport Co. The Applicant is a Goods Transport Agency ('GTA') having its registered place of business Near Swami Dharmashala, Ward 12, Suratgarh, having GST Registration number 08CRBPG5309N1ZM. 2. The Applicant is about to enter into contract with its customer for providing service of transportation of goods by road. 3. In this context the applicant has filed its application dated 09.03.2022 for Advance Ruling under sub section 2 of section 97 of the CGST Act 2017. 4. Applicant has sought advance ruling of the following question: Whether the value of diesel, provided by the customer (service recipient) to the trucks, under the facts & circumstances as specified hereinafter in Annexure "B" is to be added to the freight charged by the Applicant for the purposes of the Central Goods and Services Tax Act, 2017 ('CGST Act, 2017') & the Rajasthan Goods and Services Tax Act ('RGST Act. 2017')? 5. In Annexure 'B' he has submitted that: In terms of the contract proposed being executed, diesel is to be consumed in providing the serv....
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....odit Agarwal [STC/AAR/10/2018] held that the GST is chargeable on the value of diesel provided by the service recipient to GTA by raising separate bills. It is submitted that the said ruling will not apply to the case under examination as because in that (said) case, consideration was chargeable for the diesel provided by the service recipient by raising debit note on the GTA service provider (as is also expressively mentioned in para 3 (iv) of the order), whereas in the instant case, no consideration will be charged by the service recipient and hence no GST is chargeable thereon. The ruling on Navodit Agarwal being on opposite facts is not relevant for deciding the case of the applicant. Thus, from the above provisions, in our opinion, GST is not leviable on Free of Cost (FOC) material provided by service recipient to applicant when such goods are in the scope of service recipient as per contractual terms E. FINDINGS, ANALYSIS & CONCLUSION: 1. We have gone through the facts of the matter, documents on record, prevailing legal references and submissions made by the Applicant and the comments received from the Jurisdictional Officer on application made by the applicant. 2. The q....
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....take transportation of industrial goods on trucks/trailers listed in Annexure-1 and understand load bearing capacity of the given trucks/trailers, maintenance of speed limit on full load, adequate safeguard measures on bad roads and all other measures warranted for safe transportation of goods. 5.1.4 GTC is strictly instructed that under no circumstances would any quantity of goods carried in the truck/trailer be disposed of, other than by way of delivery of the goods to the destination against receipt. For any reason, if the consignment is not accepted at the destination point, GTC will take necessary directions from ABC on the next steps. Under no circumstance, the consignment it to be brought back without prior written approval of ABC. 5.1.5 Responsibility for any deviation and consequent losses during transportation vests solely on GTC. 5.2 CONSIDERATION,- 5.2.1 Prevalent freight rate for the specified destination will be notified by ABC from time to time and GTC will be under the obligation to ensure that only such freight, as accepted is charged. 5.2.2 GTC will submit its bills in duplicate along with receipted LR / GR. Photocopy or duplicate copy of LR is not acceptable....
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....rk of GTC. Il is agreed between the Parties that fuel which will be consumed during transportation, is in the scope of ABC and would be filled in the truck/trailer by ABC at the point of loading of the goods. 5.4.5 Such fuel shall be filled in the truck/trailer that is engaged for the concerned trip at the point of origin. The freight declared and agreed will not account for any cost/charges for fuel and GTC would not have any liability to pay for fuel for the said trip to be made by ABC. It is expressly clarified that the value of fuel which is in the scope of ABC shall by no means be interpreted as additional consideration payable for the transportation service provided by GTC or having been provided to the vehicle in lieu of freight. The ownership of the fuel would at no point be transferred to GTC or lo the truck/trailer engaged. The truck/trailer is required to use the fuel only for the specific transportation and would not be eligible to dispose of the same in any other manner. If as an exception, fuel is given at the destination, all the conditions specified herein would be applicable as if fuel has been given at the source. 6. It is seen that as per the proposed agreement....
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.... pay in relation to such supply, but which has been incurred by the recipient and not included in the price actually paid or payable. Hence, trigger of section 15 (2)(b) CGST Act can be said to apply when the contractual liability is that of the supplier, but the same stands paid by the recipient. In the issue at hand, it is seen that the contractual liability of FOC diesel is not that of the Applicant. Therefore, FOC diesel cannot be included in the scope of supply proposed to be made by the Applicant. There is no economic gain made by the Applicant and no consideration received in reference to FOC diesel. Since contractual liability of FOC diesel is not proposed to be vested on the Applicant, the present proposed transaction cannot fall under section 15(2)(b) CGST Act. FOC diesel is a condition of the contract and not a consideration of the contract. 11. Our views are affirmed by Circular no. 47/27/2018 - GST dated 08.06.2018 wherein it is clarified that "1.2... while calculating the value of the supply made by the component manufacturer, the value of moulds and dies Provided by the OEM to the component manufacturer on FOC basis shall not be added to the value of such supply bec....
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....not be used to include the given transaction since contractual liability on FOC diesel is not being vested on the Applicant. 13. The issue is also revenue neutral inasmuch as even if the value of the free of cost diesel was required to be included in the value of GTA service then also the service recipient of the Applicant would be in a position to take input tax credit of the GST charged on such an invoice raised by the Applicant. 14. The Hon'ble Supreme Court in CST v. Bhayana Builders (P) Ltd. 2018 (2) TMI 1325-SC has held that where the service provider receives free of cost goods/material from the service recipient, no amount is charged for such goods/material and, therefore, the value of such goods/ materials cannot be included in the gross amount charged by the service provider for the service provided by him. The issue whether free of cost diesel of the service recipient is required to be added in the value of the service provided by a supplier (service provider) came to be settled in the Service tax regime in the matter of Karamjeet Singh & Co Ltd. v. CCE & ST Raipur 2017 (9) TMI 1125-CESTAT New Delhi in favour of the assessee. The Departments appeal against this CESTAT'....
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....h the said judgment pertains to the Service Tax period we do not find any change in the position of law in this regard after introduction of GST. In view of the above finding, we hold that the Ld. AAR had erred in concluding that such activity was leviable to GST." 15.2 Court Ruling given in case of repealed act arc binding while interpreting pari-materia provisions of subsequent act: Hon'ble Andhra Pradesh High Court in case of Simmiti Arjuna [2004 SCC OnLine AP 893J has held that - "9. To my mind when the provision is in pari materia the interpretation placed by a Court of record even with reference to repealed Act is a precedent binding and all authorities while interpreting an amended provision. There is no reason warranting any deviation from the law laid down by this Court in K. Sundara Rao v. V. Raghava Rao (supra). Therefore, 1 am of the opinion that what is prohibited is vote by same personin more than one ward and no prohibition for a person to vote in two Gram Panchayats on the same day if he is registered as voter. On that ground, therefore, the Election Tribunal could not have invalidated the votes of P. W. 4 and his wife. This Court, therefore, holds that the judgm....