In re Tara Genset Engineers Regd (GST AAR Uttarakhand)
18% GST applicable on the cost of the diesel incurred for running generator set in the course of providing rental service
The AAR, Uttarakhand in the matter of M/s Tara Genset Engineers (Regd.) [Advance Ruling No. 11/2022-23 dated October 31, 2022] has ruled that reimbursement of expenses as cost of diesel for running of Diesel Generator (“DG”) set is an additional consideration for renting of DG and is required to be included in value of supply, which will attract 18% Goods and Services Tax (“GST”) under the provisions of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Facts:
M/s Tara Genset Engineers (Regd.) (“the Applicant”) is engaged in the business of renting of DG set to various customers. The Applicant entered into an agreement with PNB/OBC, Shivalik Nagar (“the Recipient”), to install DG on hire basis for rent of INR 4500/- per month with reimbursement of diesel cost of INR 90.29/- per litre on usages of DG set and are discharging the GST at the rate of 18% on the same.
One of the Recipient of the renting service was of the opinion that the taxes collected by the Applicant pertaining to the reimbursement of diesel cost is erroneous since diesel is a non- GST goods as per Section 9 of the CGST Act and therefore, the Applicant should reimburse the wrongly collected taxes to the Recipient.
Issue:
Whether the GST is applicable on the cost of the diesel incurred for running DG set in the course of providing DG rental services?
Held:
The AAR, Uttarakhand in Advance Ruling No. 11/2022-23 held as under:
