GST not Payable by Fair Price Shop Selling Kerosene Oil to Ration-Card Holders: AAAR [Read Order]

The West Bengal Appellate Authority for Advance Ruling ( AAAR ) recently ruled that GST is not payable by fair price shop selling kerosene oil to ration-card holders.

The appellant is an entity engaged inter-alia in the trade of Super Kerosine Oil, hereinafter also referred to as SK Oil, as a holder of license issued by the Government of West Bengal, authorizing him as a “Dealer” as defined under Kerosene Control Order, 1968.

The applicant sought advance ruling on whether the appellant being a Fair Price Shop as defined under the Notification No. 2565/FS/FS/Sectt/Sup/4M-16/2014 dated 3rd November 2014 issued by the Government of West Bengal, is liable to charge GST from the State Government against the supply made by them

While rendering the Advance Ruling, the Authority noted that the appellant’s claims that they are acting as the government’s agent in the distribution of S.K. oil to ration card holders and thus providing services to the State Government are not tenable on the ground that a supplier cannot simultaneously supply to two distinct recipients in the same transaction, particularly when there is only one recipient as per Section 2(93) of the GST. Accordingly, it was held that that the applicant is making supply to the ration card holders and not to the State Government.

The appellant contended that since the dealer, product, market, suppliers, recipient, quantity of supply and even the price, all the major ingredients that are necessary for supplying of goods or services or both, are regulated and controlled by the State Government, therefore, the appellant is supplying the essential commodity that is S. K. Oil to the ration card holders merely as an agent of the State Government.

A Two-Member Bench comprising Navneet Goel and Devi Prasad Karanam observed that “The appellant in the present case, is a Fair Price Shop and is providing service to the State Government by way of distributing of S. K. Oil as agent, it decided that the afore-mentioned notification is applicable for the appellant and the appellant is entitled for the benefit extended by the said notification. Since, in terms of the said Notification, the Tax liability of the appellant while providing service to the State Government is ‘NIL’ the question of charging GST from the State Government becomes inapplicable.”

To Read the full text of the Order CLICK HERE

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