The West Bengal Authority for Advance Ruling ( AAR ) has held that Superior Kerosene Oil attracts 5% GST on the entire value of supply.
The applicant, Provat Kumar Kundu 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 has submitted that he charges GST at 5% on his supply to fair price dealers only on the base price of kerosene as per the rate chart issued by the District Controller. He doesn’t charge tax on other charges like agent’s commission, agent’s transport charges, stationery charges, compensation on handling & evaporation loss as the District Controller (F & S) has placed reliance on the order issued by the Principal Secretary to the Government of West Bengal, Food and Supplies Department which takes reference of Notification No. 1498-FT of the Finance Department (Revenue), Government of West Bengal read with Notification No. 21/2017- Central Tax (rate) 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”.
The authority observed that the status of the applicant undisputedly appears to be an “Agent” who has been licensed to sell P.D.S. Kerosene to the Dealers and Permit Holders. The applicant has executed an agreement with the Indian Oil Corporation Limited and has been granted a license to carry on trade in Kerosene and thus the applicant satisfies all the conditions to qualify to be an “agent”. A fair price shop supplies S.K.Oil, along with other public distribution commodities, to the ration cardholders only, thus the applicant cannot be regarded as a “fair price shop”. Hence the Notification does not applicable in the case of applicant.
The Coram of Mr Brajesh Kumar Singh, Joint Commissioner, and Mr Joyjit Banik, Senior Joint Commissioner, has held that “the amount received by the applicant in this regard shall form a part of the value of supply on which tax shall be levied in terms of subsection (1) of section 9 of the GST Act. The value of supply, as per clause (c) of sub-section (2) of section 15, shall include incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services. The aforesaid clause thus clearly specifies that in respect of supply of goods, any amount charged for anything done by the supplier at the time of, or before delivery of goods shall be a part of the value of supply”. The authority further holds that the supply shall attract tax at 5% on the entire value of supply.
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