GST is leviable on
Case Title | Shree Jeet Transport |
Court | Chhattisgarh AAAR |
Honorable Judges | Member Sameer Vishnoi & Member Navneet Goel |
Citation | 2022 (2) GSTPanacea 374 HC Chhattisgarh STC/CG/AAAR/02/2021 |
Judgement Date | 28-Feburary-2022 |
Council for Petitioner | Arvinder Singh Bhatia |
Council for Respondent | NA |
Section | Section 2(31),15,15(2)(b),101 |
In Favour of | Issue Not Answered |
The Chhattisgarh Bench of Member Sameer Vishnoi & Member Navneet Goel has held that The issue is not answered and it is deemed that no ruling is issued under section 101(3) of the CGST/CG SGST Act, 2017 because of the divergence of opinion between the two members.
FACTS OF THE CASE
M/s Shree Jeet Transport (Appellant) is a GTA service provider, engaged in providing services of transportation of goods by road. The Appellant intends to enter into contract with the service recipient for providing GTA services
Had applied for advance ruling before AAR, Chhattisgarh on the issue :-
Whether diesel filled free of the cost by the service recipient in the engaged chartered (dedicated) vehicles, would form part of value of supply of service charged by die Appellant and whether GST would be leviable on value of diesel filled free of cost by the service recipient or otherwise under GTA service?
Appellant is filling Appeal on the above question as mentioned in para (II) against the order of Authority for Advance ruling Chhattisgarh Goods and Service Tax bearing order number STC/AAR/07/2020 dated 4-1-2021 before the Appellate Authority for Advance Ruling in Chhattisgarh, Atal Nagar, Raipur (C.G.)
The terms of the contract provides that the fuel (diesel), which would be required in providing the transport services, is in the scope of the recipient of service and not in the scope of the Appellant.
Considering this contractual position, whether GST would be chargeable on the value of diesel used in transportation of goods belonging to the recipient of service. The Appellant contends that value of diesel, being not in Appellant’s scope, is not part of freight consideration and hence is not exigible to GST.
GST is leviable on
COURT HELD
Considering the facts as recorded,
Findings as per the CGST Member
As per arguments of the applicant, if a recipient supplies free steel to a steel casting manufacturer who makes steel castings and then supplies them back to the recipient, then the cost of steel should not be added to the value of steel casting. This is just not acceptable
In GTA service, the fuel is the most important input for providing the transportation service. Chemical energy in the fuel is converted into kinetic energy via combustion in the IC Engine of the vehicle. This Kinetic energy of fuel finally propels the vehicle. Therefore, it is the energy of fuel which enables the movement of vehicles. Without the input of fuel, the applicant will not be able to move his vehicles or in other words, he will not be able to provide the GTA service
There are provisions to offset the tax on inputs/input services but then a prescribed procedure is required to be followed. This procedure has been prescribed in MODVAT/CENWAT rules. In the instant case the appellant is aware that there is no input tax credit available on fuel. He is therefore trying to circumvent the GST laws to lessen the GST liability by artificially bifurcating fuel expense and thus not including the same in value of taxable supply. This is clearly not permissible
Thus 1st member find no reason to differ from the findings of the Authority of Advance Ruling, Chhattisgarh under its order No. STC/AAR/07/2020 Raipur dated 4-1-2021
Findings as per the SGST Member
Perusal of the First Schedule makes clear that FOC supply made between unrelated parties under the terms of contract are not taxable supplies. Further, having considered section 15(2)(b) 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” does not include FOC diesel for the simple reason that the liability to pay for the diesel as per draft contract is of service recipient
GTA service was taxed for the first time in the year 2005. Post introduction of negative list of services in the year 2012, GTA service remained unchanged and in CGST Act, 2017 its taxability remains the same with a facility that option is available to GTA to deposit tax under forward charge else this can be continued under reverse charge. The inadmissibility of input credit of Excise Duty or GST deposited on diesel also remains same. Thus I agree with the view given by AAR that the provisions of Finance Act and GST Act are symmetrical for the issue under consideration.
Therefore, in light of the above, in my view the value of diesel which is in the scope of service recipient would not be included in taxable value of supply of the service provider.
Having regard to the facts and circumstances of the case and discussions as above, and in view of the fact that both members are not in agreement,
Bench dispose of the instant appeal filed by Shri Arvinder Singh Bhatia, the Appellant by passing the following order :
The issue is not answered and it is deemed that no ruling is issued under section 101(3) of the CGST/CG SGST Act, 2017 because of the divergence of opinion between the two members
GST is leviable on
ANALYSIS OF THE JUDGEMENT
The issue is not answered and it is deemed that no ruling is issued under section 101(3) of the CGST/CG SGST Act, 2017 because of the divergence of opinion between the two members.
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