The West Bengal Appellate Authority of Advance Ruling (AAAR) in the case of CHANCHAL SAHA (TRADE NAME: CHANAKYA SAHA & GIRIRAJ TELECOM) vide Order No. 05/WBAAAR/APPEAL/2023 dated 29.02.2024, has held that no GST is payable by fair-priced shops selling kerosene oil to ration-card holders.

In this case, The appellant is in the business as a holder of a licence issued by the West Bengal Government, authorising him to carry on trade in Super Kerosine Oil, which is issued by the Department of Food and Supplies, Government of West Bengal. The applicant sought an advance ruling on the issue of whether the applicant, being a fair price shop, is liable to charge GST from the state government against the supply made by them.

The AAR held that no supply is made by the applicant to the state government. In the absence of any supply being made to the state government, no tax would be leviable, and thus no tax should be charged to the state government. The Authority clarified that other charges, such as dealer commissions, transport charges, stationery charges, and H&E losses, will be subject to GST because they are considered a part of the value of the supply under Section 9(1).

The appellant contended that the AAR erred in ruling that the appellant is not making any supply to the state government and therefore, no tax is to be charged to the state government. The AAR, while interpreting Section 2(93) of the said Act, erroneously interpreted that the applicant is engaged in supplying S.K. oil to the ration card holders as the monetary consideration against the sale of S.K. oil is received from the ration card holders only, who are purchasing the S.K. oil from the appellant’s fair price shop, and that no other monetary or non-monetary consideration is received for these transactions. The AAR had decided the instant ruling on some extraneous grounds without considering the facts of the instant case or giving any consideration to the submissions made by the appellant during the course of the hearing.

The AAAR ruled that the appellant is a fair price shop and is providing service to the state government by way of distributing S. K. Oil as an agent. It decided that the tax liability of the appellant while providing service to the state government is ‘NIL’ and the question of charging GST from the state government becomes inapplicable.