In re Provat Kumar Kundu (GST AAR West Bengal)
We now proceed to decide whether an agent can be regarded as a fair price shop or not. It appears that a fair price shop is licensed to sell public distribution commodities against ration documents (refer: Para 2.13) i.e., a fair price shop supplies S. K. Oil, along with other public distribution commodities, to the ration card holders only.
The applicant, on the other hand, procures S.K.Oil from the Oil Marketing Company (Indian Oil Corporation Limited, in the given case of the applicant) and supplies the same to the dealers who in turn supplies it to the consumers i.e., the ration card holders. The Sub-Divisional Controller, Food & Supplies, Ranaghat issues delivery orders to the applicant for supply of S.K.Oil, which inter alia contains (i) Name of the S.K.Oil Retailer and (ii) Name of the tagged FPS Dealer.
In the light of the aforesaid facts, we are of the view that the applicant cannot be regarded as a „fair price shop’. Since the entry serial number 11A of Notification No. 1498-FT dated 22.08.2017 [Central Notification No. 21/2017-Central Tax (Rate) dated 22.08.2017] specifically refers supply of services provided by Fair Price Shops (FPS) and the applicant doesn’t qualify to be a „fair price shop’, we refrain to discuss on applicability of the other aspects of the supply as referred to in the said entry i.e., (i) whether the applicant is supplying services to State Government or (ii) whether the applicant receives consideration in the form of commission or margin.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression „GST Act‟ would mean the CGST Act and the WBGST Act both.
1.2 The applicant is an agent of Indian Oil Corporation Limited (IOCL) and is engaged in the distribution of Superior Kerosene Oil (SKO) for domestic purposes to fair price dealers. The applicant supplies the goods only to dealers which are permitted / approved by the Director of Consumer Goods, Department of Food and Supplies, Government of West Bengal. Further, the price at which the applicant can supply as an agent along with the elements of such prices are also fixed by the District Controller, Food and Supplies, Government of West Bengal.
1.3 Entry serial number 11A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) exempts „service provided by Fair Price Shops to Central Government, State Government or Union territory by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin’ from payment of tax.
1.4 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
I. Whether the applicant in the capacity of an agent would be covered within „Fair Price shops’ for the purpose of claiming the exemption?
II. Whether the invoice raised by the applicant to the dealers under PDS would be covered in service „to State Government’?
III. Whether the other charges like agent’s commission, agent’s transport charges, stationery charges, H & E Loss etc. would be chargeable to GST or treated as exempt?
IV. Whether the supply of SKO along with other charges would be treated as a composite supply wherein the principal supply would be the supply of SKO?
V. If these other charges are taxable under GST, what would be the rate of GST applicable on it?
VI. If these other charges are exempt under GST, would there a reversal of ITC attributable to such exempt supplies? Will the GST charged on the base price of SKO by IOCL from the applicant be treated as common input or input services for calculation of ITC reversal under Rule 42 of the CGST Rules 2017?
1.5 The aforesaid question on which the advance ruling is sought for is found to be covered under clause (a), (b), (d) and (e) of sub-section (2) of section 97 of the GST Act.
1.6 The applicant states that the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act.
1.7 The officer concerned from the revenue has raised no objection to the admission of the application.
1.8 The application is, therefore, admitted.
2. Submission of the Applicant
2.1 The applicant has been granted licence by the Director of Consumer Goods, Government of West Bengal for supply of P.D.S. Kerosene as an agent under the Oil Marketing Company namely Indian Oil Corporation Limited at an approved selling price to the tagged S.K.Oil Dealers and Permit Holders as directed by the Licensing Authority.
2.2 It is submitted by the applicant that it is obligatory from his part to comply with the provisions of the West Bengal Kerosene Control Order, 1968. Para 5(iv), 5A and 5B (iii) of the said order reads as follows:
Para 5(iv): “No Agent shall sell, supply or transfer Kerosene to any person other than an S K Oil Dealer duly licensed under Paragraph 6 of this order or a holder of Permit issued under Paragraph 11 of this order”
Para 5A: “Every agent after having allocation of S K Oil made by the DCG for distribution to S K Oil dealers shall take delivery of allocation from the concerned Oil Marketing Company. While making an allocation, the DCG shall consider the weekly or fortnightly requirements of the concerned agent on the basis of ration cards tagged and scales of distribution of S K Oil as may be fixed by the State Government from time to time and balance stock in hand”.
Para 5B(iii): “The Agent shall not charge any excess price other than the fair price fixed by the State Government from time to time and shall issue a cash memo against sale of S K Oil to the Dealers”.
2.3 Thus, the applicant can supply the goods only to dealers which are permitted / approved by the Director of Consumer Goods, Department of Food and Supplies, Government of West Bengal. Further, the price at which the applicant can supply as an agent along with the elements of such prices are also fixed by the District Controller, Food and Supplies, Nadia, Government of West Bengal.
2.4 It transpires from the price chart issued by the District Controller, Food and Supplies that the applicant is required to charge GST @ 5% only on the base price of Kerosene. On other charges like agent’s commission, agent’s transport charges, stationery charges, compensation on handling & evaporation loss, no GST is applicable as per the rate chart. The applicant, being bound to follow the price structure provided in the aforesaid rate chart, issues invoice charging GST @ 5% only on the price of kerosene.
2.5 The applicant submits that to arrive at the aforesaid interpretation of taxability of each of the elements, the District Controller, Food and Supplies Department, Government of West Bengal has placed reliance on the order issued by the Principal Secretary to the Government of West Bengal, Food and Supplies Department dated 3rd November 2017 which takes reference of Notification No. 1498-FT dated 22nd August 2017 of the Finance Department (Revenue), Government of West Bengal read with Notification No. 21/2017-Central Tax (rate) dated 22nd August 2017 to state that the tax rate would be NIL for both Central and State GST in respect of following:
”Service provided by Fair Price Shops (FPS) to State Government by way of sale of kerosene, sugar, edible oil etc. under Public Distribution System (PDS) against consideration in the form of commission or margin’.
2.6 According to the applicant, the aforesaid exemption in respect of supplies provided by a Fair Price Shop to State Government is not applicable in his case on the following reasons:
