Held -  We observe that for “GTA service” to come into play, the transportation of goods has had to be undertaken by the applicant only and hence the amount on account of the price of fuel that the supplier was liable to pay in normal course of business operation and in relation to such supply, which has been drafted to be incurred by the recipient of the supply (as per the agreement supra) and not included in the price actually paid for the goods or services or both, is includible in the value of a supply of services to arrive at the transaction value.Therefore, we observe the input i.e. fuel, to run and operate the vehicle, provided free of cost by the recipient of the service, for transportation of goods, shall form part of value of supply in view of Section 15 of the CGST Act, 2017, as the cost of this input has to be paid by supplier of services but incurred by the recipient (as per the terms and condition of the agreement) as for the purpose of levy of GST, cost of all the inputs,whether provided free of cost or not, has to be included in the value of supply. We find that this authority has taken the same view in the ruling dated 31.05.2021 in case of M/s Vinayak Air Products Pvt. Ltd., BHEL CFFP, Ranipur Haridwar, Uttarakhand. In view of the above facts and discussion held above we hold that the value of free diesel filled by service recipient will be subjected to the charge of GST by adding the free value diesel in the value of GTA service, under the Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017.

Held - As per Section 15(2)(b) of the CGST Act, 2017, there has to be a contract or one has to enter into contract or be a part of contract in some capacity as to who is liable to pay for the supply of fuel. As per the agreement (Annexure-2), the liability to pay for the cost of the fuel was never on the petitioner-transporter. He was only to be paid freight charges under the GTA Rules 2017, and in this backdrop, the cost of fuel could not be added as per Section 15(2)(b) of the CGST Act, 2017. Since as per the agreement (Annexure-2) the fuel “has to be procured and to be supplied by the service recipient to the petitioner, the value of fuel cannot be added to the value of freight charges charged by the petitioner”. The Supreme Court in the case of Commissioner  of Service Tax & others Vs Bhayana Builders Private  Limited & others, (2018) 3 SCC 782 was examining Section  67 of the Finance Act, 1994, with respect to the goods /materials supplied by the service recipient while procuring the taxable service of construction if the amount charged is not included in the gross amount charged by the service provider for providing such service under a composite contract of service and supply of goods, then it will lead to the obvious conclusion that the value of the goods / materials provided by the service recipient free of charge is not to be included while arriving at the gross amount simply because no price is charged by the assessee / service provider from the service recipient in respect of such goods / materials. The service tax has to be calculated on the gross amount that was charged from the service recipient. The Supreme Court in the judgments referred to hereinabove has consistently held that where diesel is filled free of cost (FOC) by the service recipient and is not included in the value of GTA service, then the cost of fuel cannot be added to the payment made by the service recipient to the transporter, and further GST be charged from the transporter. Hence, as per the consistent view taken by the Supreme Court in the judgments referred to above the cost of fuel cannot be added in the account of the petitioner, who was a transporter, and was governed by the GST rules. Thus, in the case of the petitioner, as per the agreement (Annexure-2), the cost of fuel was to be borne by the service recipient and this cost of this fuel cannot be subjected to charge of GST by adding the value of free diesel in the transaction value of GTA service done by the petitioner. Hence, value of free fuel cannot be added to value of taxable supply under Section 15(1) and Section 15(2)(b) of the CGST Act, 2017. Keeping in view the above law laid down by the Supreme Court, the present writ petition is allowed, and the order dated 30.01.2023 (Annexure-1), passed by the Appellate Authority for Advance Ruling for the State of Uttarakhand Goods and Service Tax is, hereby, set aside.

Held - Section 15(2)(b) says that the value of supply shall include any amount that the supplier is liable to pay in relation to such supply but it has been incurred by recipient of supply and not included in the prices actually paid. This section imposes statutoryobligation. The very existence of petitioner as GTA is for goods transport. Naturally, it would be the obligation for the GTA to run the vehicles and this factor needs a merited attention. The provision of Section 15(2)(b) has been tried to be by-passed by the agreement wherein the diesel was agreed to be supplied FOC by service recipient to the GTA. If we look into the facts by other angle, the expenses to fill the diesel in vehicle in furtherance of supply of service in normal condition was to be incurred by the GTA and it was his liability to fulfill such supply. However, in this issue, the expense of fuel has been agreed to be incurred by the recipient by agreement and value of diesel is excluded to evaluate the value of supply. The statutory provision of Section 15(2)(b) takes within its sweep to value, which is incurred by recipient. Therefore even by agreement in between the GTA and service recipient, this statutory liability cannot be sidelined and the merited attention of the statute sets a red line. Therefore, in the instant case, the value of service agreed to be provided necessarily will depend on the nature of service and the nature of business. The petitioner who can survive to run the business of goods transport on fuel therefore cannot claim that the diesel is supplied by the service recipient free of cost, as such, it cannot be included as the fuel is an integral part used in providing the Transportation Service and is essential for GTA provider. Without fuel the entire business of GTA cannot survive. Therefore, fuel being an integral part cannot be bifurcated to over come a tax liability. 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 inter-dependent 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. In view of the foregoing discussion, no relief can be granted in favour of the petitioner. Accordingly, the petition is dismissed.

Held - In the instant case, the free supply material supplied by the recipient of goods to the supplier is an additional consideration (non-monetary) for the supply. This non-monetary consideration i.e supply of used batteries free of cost has a direct nexus with the underlying supply. The appellant stands to gain substantial economic benefit out of the free issue material provided by the receiver of goods. Here the appellant is not paid wholly in money. The contract is for the supply of Silver Oxide - Zinc Torpedo propulsion Battery Type A-187M3-Complete with Hardware. The main input/raw material namely Silver is supplied free of cost against Bank Guarantee in the form of old and used batteries by the recipient, in addition to the consideration in money value for the supply of said Silver Oxide Zinc Torpedo propulsion Battery. Hence, the provision of Section 15(1) of the CGST Act, 2017 alone is not sufficient to adopt the transaction value as the value of supply of goods or services or both is not applicable for determining the value of supply in the appellant's case when a substantial part of raw material viz, Silver is supplied free of cost by the receiver of supply. The argument put forth by the appellant that the "consideration" is required to be confined as per the terms of agreement cannot be interpreted literally, as the definition of the term "consideration" vide Section 2(31) of the CGST/TNGST Act, 2017 mandates that "consideration" inrelation to supply of goods or services includes any payment whether in money or otherwise made or to be made. Hence, the consideration for the supply of new Silver Oxide Zinc Torpedo propulsion Battery manufactured by the appellant is paid both in terms of 'money' and 'used Batteries'. To sum up, the value of Silver supplied free of cost by the Naval formation in the form of old batteries is required to be included in the taxable value in terms of provisions of Section 7 read with Section 2(31), Section 15(2) (b) as also Section 15(4) of the CGST/TNGST Act read with Rule 27(b) of the CGST/TNGST Rules, 2017. The appellant has also relied on the Circular No.47/21/2018-GST dated 8th Jun, 2018 which was confined to that specific subject material of moulds and dies (Capital Goods) which are being supplied by the Original Equipment Manufacturer (OEM) to a Component Manufacturer free of cost. The context which lead to issuance of this circular need to be examined. The facts of the case on hand is different from the clarification given by the Board vide the above circular. Here the Silver is extracted from the used batteries supplied by the recipient, which is the main raw material for the manufacture of the Silver Oxide-Zinc battery and hence the above said Circular as well as the AAR, Maharashtra's decision have no relevance on this issue. We uphold the ruling given by the Authority of Advance Ruling in Order No. 28/ARA/2024 dated 06-12-2024 and dismiss the appeal filed by the appellant.

Held - A plain meaning of the expression ‘the gross amount charged by the service provider for such service provided or to be provided by him’ would lead to the obvious conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the ‘gross amount’ simply, because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. This further gets strengthened from the words ‘for such service provided or to be provided’ by the service provider/assessee. Again, obviously, in respect of the goods/materials supplied by the service recipient, no service is provided by the assessee/service provider. Explanation 3 to subsection (1) of Section 67 removes any doubt by clarifying that the gross amount charged for the taxable service shall include the amount received towards the taxable service before, during or after provision of such service, implying thereby that where no amount is charged that has not to be included in respect of such materials/goods which are supplied by the service recipient, naturally, no amount is received by the service provider/assessee. Though, sub-section (4) of Section 67 states that the value shall be determined in such manner as may be prescribed, however, it is subject to the provisions of sub-sections (1), (2) and (3). Moreover, no such manner is prescribed which includes the value of free goods/material supplied by the service recipient for determination of the gross value. A plain reading of Explanation (c) which makes the ‘gross amount charges’ inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account etc. It is in that hue, the provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words ‘in any form of payment’ are by means of issue of credit notes or debit notes and book adjustment. With the supply of free goods/materials by the service recipient, no case is made out that any credit notes or debit notes were issued or any book adjustments were made. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such goods can vary significantly. Such a value, has no bearing on the value of services provided by the service recipient. Thus, on first principle itself, a value which is not part of the contract between the service provider and the service recipient has no relevance in the determination of the value of taxable services provided by the service provider.

Held - The CBIC in its Circular No 47/21/2018-GST dated 08.06.2018 has clarified that goods owned by OEM that are provided to a component manufacturer on FOC basis do not constitute a supply as there is no consideration and in such cases, the value of goods provided on FOC basis shall not be added to the value of supply of components. However, in case the contractual obligation is cast upon the component manufacturer to provide moulds/dies but the same have been provided by the OEM on FOC basis, then the amortized cost of the moulds/dies is required to be added to the value of the components supplied. In the present case, the terms and conditions of the contract between the OEM DICV and the Appellant clearly indicate that no such obligation is cast on the Appellant. The OEM has taken the responsibility to provide the tools. In a case where the tools are developed and manufactured by the Appellant according to the requirements of the customer (DICV), then the total cost of the tools is borne by DICV and the title of the tools transfers to DICV, while the Appellant is allowed to retain the tool in his premises for undertaking the manufacture and supply of the components to DICV. In such a case, the value of the tools, which has already suffered tax and supplied FOC to the Appellant, is not required to be added to the value of the components supplied by the Appellant. We accordingly set aside the ruling of the AAR and hold that the cost of the tools supplied by the OEM customer on FOC basis to the Appellant is not required to be added to the value of the components supplied by the Appellant. We emphasize that the ruling given by us in this appeal proceeding is based on examination of the contract and purchase orders furnished by the Appellant in the case of their customer M/s Daimler India Commercial Vehicles Pvt Ltd. This ruling will apply to other contracts entered into by the Appellant only if the terms and conditions contained therein are the same as those contained in the contract placed before us.

Held - On going through the provisions of Section 15 of the GST Acts, 2017, we find that the amount charged by the appellant from their customer in the form of reimbursement of ATF fuel will actually be covered under Section 15(2)(c) which reads as ‘incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of supply of goods or services or both at the time of, or before delivery of goods or supply of services. In the instant case, the appellant has charged the amount spent by them towards arrangement/providing of ATF for flying of Helicopter in respect of supply of rental service of helicopter provided to the ONGC. The appellant has collected the said amount in the form of reimbursement from their customer / recipient of supply of service and the said reimbursement is in respect of the arrangement/providing of ATF made by them, at the time of / before the delivery of supply of services to their customer/recipient. Thus, in term of Section 15(2)(c) of the GST Acts, 2017, the arrangement of ATF/providing of ATF in the helicopters/aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from the customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) have been fulfilled and accordingly, the amount charged by the appellant (in respect of the arrangement/provision of ATF made by them for supply of “Rental service of Helicopter”) from their customer in the form of reimbursement, is undoubtedly includible in the value of supply of services of ‘Rental services of aircrafts’ in the instant case. In terms of Section 15(2)(c) of the GST Acts, 2017, the arranging of/provision of ATF in the helicopters/ aircrafts is the activity done by the appellant at the time of OR before the supply of services to their customer AND the appellant is charging the amount spent in respect of the said ATF, from their customer in the form of reimbursement. Hence, the conditions of Section 15(2)(c) of the GST Acts, 2017 have been fulfilled and accordingly, the amount charged by the appellant (in respect of the ATF fuel) from their customer in the form of reimbursement, is undoubtedly includable in the value of supply of services of ‘Rental services of aircrafts’ in the instant case. In the instant case, the payment made or to be made by the recipient includes payment towards the services rendered by the appellant as well as the payment towards ATF, which has been arranged for by the appellant and filled in the aircrafts. This means that payment made or to be made by the recipient to the appellant would not only include the payment for the supply of services i.e. “Rental services of aircraft including passenger aircrafts, freight aircraft and the like with or without operator” but would also include the amount for the ATF (fuel) filled in the aircraft by the appellant. Therefore, the amount of ATF, which is received as reimbursement by the appellant will undoubtedly form a part of the ‘consideration’ i.e. the value of the services provided by the appellant and GST is liable on the same.

Held - We observe that without the fuel, the Diesel Generator (DG) Set cannot be operated to generate/ produce “Electricity”, i.e. intended purpose of installing DG set on hire is not achieved. The rental service of Diesel Generator (DG) Set has the integral component of running the Diesel Generator and for this to undertake, “Diesel” is required. The running condition of Diesel Generator (DG) Set cannot be achieved without the fuel i.e. the “Diesel”. The contract entered between the applicant and the recipient is for the hiring of DG Set and is a comprehensive contract with the consideration having a fixed component and a variable component. The fixed component is the monthly fixed rent charged in the invoice for the DG Set and the variable charge (Running Charges) is the charge for the diesel used. Both are part of the same consideration and are for the contract of supplying DG Set on hire. Though it appears that the applicant is receiving the reimbursement of diesel cost, but we opine that the recipient is not paying for the diesel only but for the services of DG Set which have been hire on rent and the diesel is an integral part of the supply of DG Set rental service. There is no separate contract for supply of diesel and even single invoice is issued for the supply of rental service of DG Set although both the components are shown separately. Hence, the reimbursement of expenses as cost of the diesel, for running of the DG Set is nothing but the additional consideration for the renting of DG Set and attracts GST @18%. We also find that Karnataka Authority for Advance Ruling vide Advance Ruling No. KAR ADRG 44/2021 dated 30.07.2021 in the similar case of M/s. Goodwill Autos, Hubbali, Dharwad has held that the cost of the diesel incurred for running DG Set in the course of providing DG Rental Service is nothing but additional consideration for the supply of DG Set on rent as per section 15 of the GST Act and hence attracts GST @ 18%. In view of the above facts and discussion held above we hold that consideration for reimbursement of expenses, as cost of the diesel for running of the DG Set, is nothing but the additional consideration for the renting of DG Set and attracts GST @ 18% under the provisions of Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017.