IMPORTANT POINT
The cost of free diesel supplied by a service recipient cannot be included in the taxable value of Goods Transport Agency services under the CGST Act.

JUDGMENT :

RITU BAHRI, C.J.

1. The petitioner M/s New Jai Hind Transport Service is a proprietorship firm and providing services of Goods Transport Agency (in short GTA) to its customers/service recipients.

2. The petitioner is challenging the order passed by learned Appellate Authority for Advance Ruling for the State of Uttarakhand Goods and Service Tax dated 30.01.2023 (Annexure-1 to the writ petition) issued by respondent No. 3. Petitioner is a sole proprietor of the said firm and is duly registered under the Uttarakhand Goods and Service Tax Act, 2017. His place of business is 1st Floor, Shop No. 72, Avdhoot Mandal, Haridwar, Uttarakhand.

3. A proposed draft agreement (Annexure-2 to the writ petition) was entered between the petitioner and the service recipient. The salient features of the proposed draft agreement are as under:

“(i) Scope: Petitioner will transport the goods belonging to the service recipient from its factory to the specified destination within in a specified period (reasonable) of time taking specified route. Petitioner will be assuming transit risk of the goods being transported.

(ii) Exclusivity: The vehicle, deployed by the petitioner, shall exclusively transport the goods belonging to the service recipient for the trip, i.e., the vehicle deployed by the petitioner for the particular trip cannot transport the goods for any other person.

(iii) Consignment Note: Petitioner will issue consignment note, serially numbered, signifying the receipt of goods from service recipient for the purposes of transportation. The consignment note, inter alia, will contain details of the date of consignment note, registration number of the goods carriage deployed by the applicant, name and address of the consigner, name and address of consignee, quantity and type of goods loaded for transportation, upon successful delivery of the consignment, the petitioner will obtain proof of delivery from the consignee, which shall signify completion of service by the petitioner.

(iv) Fuel: Fuel required to transport the goods of service recipient shall be in the scope of the service recipient and not in the scope of work of the petitioner. In other words, fuel will be supplied by the service recipient, free of cost to the petitioner. Fuel will be supplied in required quantity depending on load and trip. Ownership of the fuel shall always remain with the service recipient.

(v) Consideration: Petitioner will raise tax invoice towards freight charges for the GTA service provided to service recipient. Freight charges shall be the only consideration and sole consideration that will flow between the parties under this agreement. Freight charges shall not include any element of value/cost of the fuel because under the agreement between the parties, fuel required for transport is within scope of the service recipient and shall be supplied by the service recipient in required quantity for exclusively transporting the goods of the service recipient.”

4. Petitioner filed an application before the learned Goods and Service Tax Advance Ruling Authority Uttarakhand seeking advance ruling on the following question:

“Whether the value of free diesel filled by service recipient under the accepted terms of contractual agreement in the fleet(s) placed by GTA service provider will subject to the charge of GST by adding this free value diesel in the value of GTA service, under the Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017?

Said application is dated 30.06.2022 (Annexure-3).

5. Vide order dated 26.09.2022 (Annexure-5), Goods and Service Tax Advance Ruling Authority Uttarakhand ruled that the value of diesel filled by service recipient in the vehicle(s) provided by the petitioner, on FOC basis as per the terms of the agreement, will be subject to the charge of GST by adding the free value of diesel to arrive at the transaction value of GTA service.

6. The petitioner challenged the order dated 26.09.2022 (Annexure-5) and vide i