The Authority for Advance Ruling, Uttarakhand (AAR) ruled that GST is applicable on the cost of diesel incurred for running diesel generator set in the course of DG rental services.
M/s Tara Genset Engineers, the applicant has sought advance ruling on the liability to pay tax on services for the cost of diesel for running DG rental services. The applicant was a partnership firm that rented DG set to customers in Uttarakhand district on agreement of installing DG on a hire basis for rent with reimbursement of diesel cost for running DG. And they were collecting GST of 18% for the diesel and DG set separately. One among the recipient complained about taxes on diesel as it was exempted from GST. Hence the applicant sought an advance ruling on whether GST is applicable on the cost of diesel incurred for running the diesel generator set in the course of DG rental services.
Shri Pankaj Rayel appeared on behalf of the applicant, and Shri Deepak Brijwal deputy commissioner appeared for the respondent. The applicant contended that as per section 15 of CGST act 2017, the value of supply of good or service or both shall be the transaction value which is the price actually paid,
The AAR Uttarakhand comprising of Shri A NuragMisra and Shri Rameswar Meena ruled that GST was applicable on the cost of diesel for running DG rental services finding that the cost of diesel incurred for running DG set in the course of providing DG rental service was nothing but additional consideration for the supply of DG set on rent as per S.15 of CGST Act 2017. And assumed that the value of diesel should be included in the value of supply as the purpose of DG set wouldn’t be achieved without diesel and held that collecting separate GST for reimbursement for diesel incurred is not erroneous.
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