Value of Diesel/HSD received free of cost from the service recipient would form part of value of supply of service

Facts: The applicant is engaged in carrying out mining work. He receives work from Cement Company for executing mining from them and applicant also received HSD oil from service recipient for equipment and vehicles used for executing mining contract. 

Issue: Whether the Diesel received free of cost from service recipient, the value of the same shall form part of value of supply of service.

Held: Diesel so provided by the service recipient to the applicant for use in the equipment and vehicles of the applicant forms an important and integral component of this business process. As per section 15(2)(b) of CGST Act, the value of supply includes any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both.

Thus, from the said legal provisions, it gets amply clear that any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both is includible in value. The AAR held that in terms section 15(2)(b) of CGST Act 2017, value of said HSD Oil issued free of cost by the service recipient would form part of value of supply of service by applicant.

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