The Tamil Nadu Authority for Advance Ruling ( AAR ) has held that reimbursement of toll charges is liable to include in the value of supply and is taxable under GST Act.
The applicant, NTL India Private Limited engaged in providing services namely rental services of road vehicles including buses, coaches, cars and other motor vehicles, with operator classified under HSN Code 996601 and other transport services classified under HSN Code 996799 and are discharging GST at appropriate rates.
The details about the activity of renting services (996601) were submitted by the applicant but failed to submit details about activities falling under SAC 996799 which have been said to be undertaken by them.
Further stated that they were entering into a contract with their clients to pick up employees of their clients from the specific pick-up points and drop them in their office premises for which they raise invoices every month and discharge tax accordingly and the toll charges at different locations were reimbursed by their clients, by indicating toll charges separately in the invoices raised.
It was evident that the exemption under Notification No. 12/2017-CT (rate) dated 28.06.2017 was available to the service provider only and not to the service receivers. The authority observed that the cost of toll charges which are paid by the applicant and later reimbursed by their clients should be included in the value of supply and tax be payable at the applicable rate on the entire value of the supply, including toll charges paid.
Shri T G Venkatesh, I.R.S., Additional Commissioner and Smt. K Latha Joint Commissioner (ST) ruled that “the Applicant is a service provider of transportation services to their clients and the reimbursed toll charges should be included in the value of supply and tax be paid at the appropriate rates on the entire value of supply.
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