In re Revathi Enterprises (GST AAR Karnataka)
Summary: M/s Revathi Enterprises, a Goods Transport Agency (GTA), filed an application for advance ruling concerning the GST treatment of High Speed Diesel (HSD) supplied free of cost by service recipients for dedicated or chartered vehicles deployed for transportation. The applicant stated that, under its transportation contracts, the service recipients were responsible for procuring and supplying diesel at their own cost and that freight payable to the applicant excluded the cost of diesel. The applicant therefore sought a ruling on whether such free-of-cost diesel would form part of the value of its GTA service and whether GST would be leviable on the value of the diesel. The application was filed under Section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017 and corresponding KGST provisions.
The applicant relied, in particular, upon Section 15(2)(b) of the CGST Act, contending that the provision would apply only where an amount that the supplier was liable to incur in relation to the supply was incurred by the recipient on behalf of the supplier. According to the applicant, because the contracts placed the responsibility for procurement and supply of diesel upon the service recipient and the freight excluded diesel cost, the diesel value should not form part of the GTA service value. The Authority recorded that the application raised questions concerning determination of liability to pay tax under Section 97(2)(e), as well as whether a particular activity amounted to or resulted in a supply. However, the Authority did not examine these questions on merits.
