TaxTMI 
TaxTMI 
2021 (1) TMI 1287
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.... they intend to enter into a contract with the companies/parties (service recipient) and as per terms of contracts, High Speed Diesel (fuel) filled and consumed in the engaged dedicated (chartered) vehicles used for transportation under GTA service will be under the scope of the service recipient and freight is paid by the companies / parties, excluding diesel. The applicant thus seeks advance ruling on the above said points, considering that the diesel filled and consumed by the recipient company would not be included in the amount charged by the applicant in tax invoice issued under Section 31 of CGST Act, 2017. 3. Contentions of the applicant:- The applicant, is a GTA service engaged in providing services of transportation of goods by road and the applicant intends to enter into a contract with the service recipient for providing GTA services. As per the draft agreement, the applicant is required to provide trucks / trailers on a day to day requirement on a non-exclusive basis and as per the scope of service of the applicant is to provide the truck /trailer along with the driver and report at the unit of the service recipient. The fuel is in the scope of the service recipient....
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....es the amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient and not included in the price actually paid or payable. As the contractual liability of the fuel is not that of the applicant, cost of fuel cannot be included in the scope of supply made by the applicant. Further that it stands settled in service tax laws that value of diesel supplied free of cost by the client in the course of providing service, the said value cannot become part of GTA service. That, the matter is covered by circular no. 47/27/2018-GST dated 8.6.2018, wherein it has been clarified in case of tools, moulds and dies which are in the scope of buyer and are provided on FOC basis to the supplier for use in the manufacturing goods, then same will not form part of the transaction value and no GST will be payable thereon. VII. That, even otherwise the transaction is revenue neutral as service recipient is eligible to fake input tax credit of the GST charged by the applicant on the GTA service provided. However, in terms of section 15 (2) (b), it will be erroneous and contrary to law for the applicant to charge GST just because recipient is enti....
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....cifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGST Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case. 5.1 As per Section 7 (1) of CGST Act: For the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 5.2 Section 2(31) of the CGST ACT, 2017 defines consideration as: Consideration in relation to the supply of goods or services includes (a) Any payment made or to be made, whether in money or otherwise, in ....
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....idy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given- (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. (4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.' (5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.8 Explanation.-For the purposes of this Act,- (a) per....
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....pect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) The monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: 5.5 In terms of the provisions of law as envisaged under Section 15 (1) of CGST Act, 2017, to ascertain as to whether the value of a supply of services is the transaction value, which is the price actually paid or payable for the said supply of services and as to determine whether the value of taxable supply paid by recipient to the supplier is the 'sole consideration", it is necessary to refer to the definition of the term 'consideration". The term 'consideration' has been defined under Section 2(31) of the CGST Act supra, to mean and include monetary value of any act or forbearance, whether or not voluntary which is made in respect of, in....
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....ee of cost fuel (diesel) here by the service receiver to the applicant GTA, in the proposed agreement appears to be an attempt to circumvent the express provisions of law to escape the liability to tax. There are several court rulings which declare that no mutual terms or conditions of a contract / agreement between two parties involved can override the statutory definition of law, so as to alter the nature of transaction perceived for non-payment of accruing tax liability. It will definitely not be out of context to mention here that in the intended transaction, the value of diesel will be charged as "expense" by the service receiver and will not go unaccounted in the books of accounts of the service receiver. Further the said provision of diesel to the applicant by the service receiver would definitely be treatable as an independent "supply" exigible to tax as applicable, had diesel not been out of the scope of levy under GST as of now. Thus, this also appears to be a cause to avoid incidence of tax on the value of the all important ingredient i.e. diesel (fuel), much necessary for the provision of the said service by the applicant GTA. This expenditure on account of Diesel charg....
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.... charged "for such service provided or to be provided". Hence applying the ratio of Hon'ble Apex Court decision (supra), it is clear that in the instant case diesel/fuel being the integral part used in providing the transportation service by GTA in question, as discussed above, cost of the same is the key and accordingly the most decisive and vital factor for arriving at the value for the supply in question. 5.6 We find that to bring home their point of contention that the value of diesel supplied free of cost by the client in the course of providing service cannot become part of GTA service, the applicant have cited reference to the case law of M/s Karamjeet Singh and Co. Ltd vs CCE 2017 (9) TMI 1125 CESTAT, M/s RK Transport Company vz CCE 2020(11)TMI CESTAT, New Delhi, UOI vs Intercontinental Consultants and Technocrafts Pvt Ltd 2018 (3) TMI 357 and Commissioner of Service tax vs M/s Bhayana Builders (P) Ltd 2018 (2) TMI 1325 SC. These case laws pertain to the erstwhile service tax period and that too prior to the negative list regime under Service tax provisions, governed by Finance Act, 1994. The case of Karmajeet singh pertains to the period 2008 to 2012, whereas the....
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.... 8.6.2018 relating to supply of components by using mould / dies belonging to the component manufacturer. In this context, it is seen that at para 1.3 of the said cited circular it has been clarified that if the contract between OEM and component manufacturer was for supply of components made by using moulds/belonging to the component manufacturer, but the same has been supplied by the OEM to the component manufacturer on FOC basis, the amortized cost of such moulds / dies shall be added to the value of the components and that in such cases the OEM will be required to reverse the credit availed on such moulds / dies, as the same will not be considered to be provided by OEM to the component manufacturer in the course or furtherance of the former's business. In the case of supply of components, which is supply of goods and not service, unlike in this case it is to be noted that components manufactured for the Original Equipment manufacturer (OEM), are a teller made item and it is manufactured using moulds/die by the component manufacturer as per the specifications and design as required by the OEM, for its further use in the subsequent manufacture of Original equipment i.e. for t....
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....service but it extends to any process identified with franchiser with respect to the trade mark, service mark, trade name etc. The amount in question is the part of the weekly, gross sales being given by the service recipient to the service provider mutually consenting for the same to be used for the process identified by SSIPL to advertise the subway brand /trade name. Hence it is not simplicitor on advertising service, but is very much the part of the franchise service rather than by the appellant to the franchisees. Hence, definitely qualify for for such service provided". From the above discussion, we are of the firm opinion that the amount of weekly gross sales @4.5% but for franchise advertisement fund is nothing but the part of the gross value of the contract for providing the franchise Service and, hence was equally taxable as 8.5% of the said weekly gross sales is taxable. Further in the aforesaid case, Hon'ble Tribunal distinguished the findings in Intercontinental consultants and technocrats Pvt Ltd supra, holding that "Similarly, Intercontinental Consultants and Technocrats Pvt Ltd case supra is also not applicable in view of the above discussion about Section 67....