GST
TRT-2025-
AAR Uttarakhand
Date:-31-10-22
In:-
Issue Favourable to Tax Payer ?:-
Order date – 31 October 2022
Facts –
- The Applicant, M/s Tara Genset Engineers, are a partnership firm in the business of renting of DG set to various customers in different district Districts of Uttarakhand.
- They entered into agreement with them to Install diesel Generator on hire basis for rent with reimbursement of diesel cost on usages of the DG Set and have been discharging the Tax @ 18 % JCGST @ 9% + SGST @9%) on DG Set hiring charges plus on reimbursement of diesel cost incurred for running DG Set.
- However, now one of the recipients of service is of the opinion that the taxes charged and collected by them on the component of the reimbursement of diesel charges for running the Diesel Generator was erroneous, as the said commodity i.e. the diesel does not come under the purview of GST. Since diesel is a non-Goods as per Section 9 of the CGST/SGST Act, 2017 the service recipient requested the applicant has to reimburse the wrongly collected taxes
Issue –
- Whether GST applicability of cost of the diesel incurred for running DG set in the course of providing DG Rental Service?
Order –
- The AAR finds that it is very clear from the provision that the Section15 of the CGST Act, 2017 mandates the value of supply shall also include other things any other 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 do not included in the price actually paid or payable for the goods or services or both. The use of the word “supplier is liable to pay in relation to such supply” brings out the intent of the legislature and leaves no rooms for ant doubt.
- 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 the expenses as cost of diesel for running of the DG set is nothing but the additional consideration for the renting of DG Set and attracts GST @18%. The same was held by the Karnataka Authority for Advance Ruling in the case of M/s Goodwill Auto’s (KAR ADRG 44/2021 dated 30.07.2021)
- In view of the above, it is held that GST @18% is applicable on the cost of diesel incurred for running DG Set in the course of providing DG rental service as per Section 15 of the CGST/SGST Ac
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