Levy of GST— In the instant case, the applicant submitted that they are a partnership firm in the business of Renting of DG Set to various customers in different Districts of Uttarakhand and has entered into agreement with them to Install diesel Generator on hire basis for rent with reimbursement of diesel cost on usages of the DG Set and have been discharging the Tax @ 18 % on DG Set hiring charges plus on reimbursement of diesel cost incurred for running DG Set.

However, now one of the recipients of service is of the opinion that the taxes charged and collected by them on the component of the reimbursement of diesel charges for running the Diesel Generator was erroneous, as the said commodity i.e. the diesel does not come under the purview of GST. Since diesel is a non-GST Goods as per Section 9 of CGST/SGST Act, 2007 the service recipient has requested the applicant to reimburse the wrongly collected taxes.

In view of the above facts, 'the applicant' is seeking advance ruling as to whether the “GST applicability of cost of the diesel incurred for running DG Set in the Course of Providing DG Rental Service?”

The contract entered between the applicant and the recipient is for the hiring of DG Set and is a comprehensive contract with the consideration having a fixed component and a variable component. The fixed component is the monthly fixed rent charged in the invoice for the DG Set and the variable charge (Running Charges) is the charge for the diesel used. Both are part of the same consideration and are for the contract of supplying DG Set on hire. Though it appears that the applicant is receiving the reimbursement of diesel cost, but we opine that the recipient is not paying for the diesel only but for the services of DG Set which have been hire on rent and the diesel is an integral part of the supply of DG Set rental service. There is no separate contract for supply of diesel and even single invoice is issued for the supply of rental service of DG Set although both the components are shown separately. Hence, the reimbursement of expenses as cost of the diesel, for running of the DG Set is nothing but the additional consideration for the renting of DG Set and attracts GST @18%.

Held that— GST @ 18 % is applicable on the cost of the diesel incurred for running DG Set in the Course of Providing DG Rental Service as per Section 15 of the Central Goods and Services Tax Act, 2017 / Uttarakhand Goods and Service Tax Act, 2017.