Date of Order: 26 September 2022

Fact:

• The applicant namely M/s Gurjinder Singh Sandhu is in the process of discussion for providing transport of goods service by road to a recipient which is not a related person.
• As per the draft agreement they will have to transport the goods from the factory of the recipient to the destination specified by the recipient by deploying a vehicle with driver/staff to run/operate, for exclusive transport of their goods but the fuel required to transport the goods shall not be within the scope of work of the applicant and shall be borne by the recipient of the said service.
• Applicant submitted that since the fuel (diesel) is not in the scope of the applicant as per the draft agreement hence while charging GST at the applicable rate, on the freight consideration charged by them from the recipient under the forward charge mechanism, the cost of the fuel consumed/ used for transport of the goods would not be included therein.

Issue:

• Whether the value of free diesel filled by the service recipient under the accepted terms of the contractual agreement in the fleet(s) placed by the GTA service provider will be subject to the charge of GST by adding this free value diesel to the value of GTA service ?

Order:

• The authorities observe that section 15 of the CGST Act mandates that the value of supply shall include among 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 not included in the price actually paid or payable for the goods or services or both.
• The authorities observed that provisions of the Section 15 above are very clear and in unambiguous terms, it has been mandated 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 and not included in the price actually paid or payable for the goods or services or both. The use of words "supplier is liable to pay in relation to such supply" brings out the intent of the legislature and leaves no room for any doubt.
• The authorities found that without fuel the vehicle does not operate (run) and without running i.e. moving from one place to another, the act of transportation of goods by road does not happen.
• Hence, the value of free diesel filled by the service recipient in the vehicle(s) provided by the applicant will be subject to charge of GST by adding the free value of diesel to arrive at the transaction value of GTA service.