Addable to taxable value is the diesel that the recipient sent to GTA at no expense
Fact and issue of the case
Facts of the case :
1. (a) This instant petition is filed to challenge the order dated 28-2-2022 (Annxure – P/5) passed by the Appellate Authority for Advance Ruling, Chhattisgarh (for brevity ‘the AAAR’) as no decision was rendered in terms of Section 101 (3) of the Central Goods and Service Tax Act, 2017 (for brevity ‘the CGST’) and the Chhattisgarh Goods and Service Tax Act, 2017 (for brevity ‘the CHGST’) and the order dated 4-1-2021 (Annexure – P/6)passed by the Authority for Advance Ruling, Chhattisgarh (for brevity ‘the AAR’) to be illegal wherein it was held that Goods and Service Tax (for brevity ‘the GST’) would be leviable on the value of diesel provided by the service recipient Free of Cost (for brevity ‘FOC’).
(b) The petitioner also challenges the provisions of Section 101 (3) of the CGST and CHGST along with agenda of the 8th GST Council Meeting held on 3rd & 4th January, 2017 at New Delhi on the ground that the same is constitutionally invalid and ultra vires to Articles 14 and 19 (1)(g) of the Constitution of India, to the extent the provision provided that no decision would be rendered by the AAAR because of difference of opinion between the two members, which would lead to arbitrary and unreasonable distinction and left the parties without any remedy.
(c) The petitioner is a Goods Transport Agency (for brevity ‘the GTA’) service provider, engaged in providing service of transportation of goods by road. It is pleaded that the petitioner intends to enter into an agreement with service recipient for providing GTA services. As per the proposed terms of agreement, it was agreed that the petitioner would provide trucks/trailers along with driver for transportation of goods belonging to the service recipient on a day-to-day and non-exclusive basis and Clause 2 of the draft agreement, the service recipient responsible for providing fuel in the trucks/trailers the petitioner on free of cost basis (FOC) thereby it that component of fuel would not be the responsibility of the petitioner, who is a GTA, in the scope of service recipient. Copy of draft agreement has been annexed with this petition as Annexure – P/7.
Observation of the court
However, when we examine the final GST Law, Section 15(2)(b) includes that any amount that the supplier is liable to pay in relation to such supply but has been incurred by the service recipient and not included in the prices paid or to be payable is to be taken into account to value the service answers this query. The Legislature has categorically enveloped such kind of supply within the ambit unless exempted by any provision. Therefore, the emphasis cannot be made at this stage while interpreting the provisions of Section 15(2)(b) of the GST Act, 2017 with the proposed GST Law specially taking into consideration the nature of business by GTA, the service provider.
Another submission is made by the petitioner that the purpose of advance ruling stands defeated and the section is Another submission of the petitioner is that Circular issued by the Government of India provides a free supply is not to be added to the valuation of the service provider and therefore the Circular issued u/s 168 of the CGST Act would prevail.
A perusal of the said Circular No.47/21/2018-GST would show that it has been confined to specified subject material of moulds and dies of Car manufacturing, which are being supplied by the Original Equipment Manufacture OEM) to a Component Manufacturer free of cost and the Circular purports that it would constitute the supplier as there is no consideration involved.
Again when we examine the nature of business of the petitioner, who is a GTA, the nucleus of survival of business shows that the business of petitioner entirely survives on transportation. Since the transportation inter-alia is an interdependent on supply of fuel, it would be a crucial component to run the business of GTA. If such integral part of survival of reins are held by service recipient, in such a case, it would be actually doing the substance addition of GTA survival. Therefore, the Circular dated 8th June 2018 on which the petitioner tried to rely upon would not be of any help especially considering the nature of business and the provisions of Section 7(1)(a) and 15(2)(b) of CGST Act.
The last submission which is made that since there is divergent opinion between the two appellate authorities under the GST AAAR against the finding of AAR, therefore, the petitioner has been left with no remedy and this section is arbitrary and defeats the very purpose of advance ruling. In this aspect, section 101 sub-section (3) of the CGST Act would be relevant which purports that where the members of the Appellate Authority differ on any point or any points referred to in appeal or reference, it shall be deemed that no advance ruling would be issued in respect of question under appeal or reference. However, against such finding u/s 10 1(3) an appeal is provided u/s 101-B to the National Appellate Authority and the period of 30 days is provided. Till the petition was filed, no National Appellate Authority was notified. However, this Court cannot direct the State to legislate on the doctrine of separation of powers. In view of the observations made in foregoing paragraphs the initial order passed by the A AR on 04.01.2021 shall revive and it is observed that though the diesel was provided free of cost by the service recipient, it would nevertheless be added to the value for the purpose of GST.
In view of the foregoing discussion, no relief can be granted in favour of the petitioner. Accordingly, the petition is dismissed.
1 (2018) 3 SCC 782
2 (2022) 10 SCC 700
3 (2022) 2 SCC 603
4 (2018) 4 SCC 669
5 (2004) 10 SCC 1
6 (2010) 8 SCC 137
7 (1999) 8 SCC 667
8 1985 (Supp) SCC 205 : AIR 1985 SC 1041