No GST to be charged from State government being not a recipient under GST

The West Bengal Authority for Advance Ruling (AAR) has ruled that fair price shops, like the one operated by M/s. Chanchal Saha, are not required to charge GST to the State government. This is because the actual supply of goods, such as kerosene and sugar, is made to ration card holders, who are the recipients. The shop owner receives payment from these card holders, and no consideration is provided by the State government for these specific transactions.

The AAR, West Bengal, in the matter of M/s. Chanchal Saha [Advance Ruling No.09/WBAAR/2023-24 dated June 26, 2023] ruled that the assessee is supplying goods to ration card holder and not to State government and since, the recipient is ration card holder and not the state government thus, no tax will be charged from the State government. 

Facts

M/s. Chanchal Saha ("the Applicant") is a licensed dealer under Public Distribution System ("PDS") of West Bengal government and runs a fair price shop which is authorized for distribution of essential commodities viz. sugar, kerosene etc. to the ration card holders. The Applicant submitted that it procures essential commodities from government decided agents.

The Applicant further submits that the purchase and selling price of the Applicant is fixed by Government and the difference between them is the dealer’s commission, transportation charges and stationary charges etc.

Moreover, the Applicant submitted that the consideration received by the Applicant is solely from the ration card holder other than that there is no other consideration flows towards the sale of essential goods.

The Applicant filed application for advance ruling seeking whether the commission received from state government is liable to GST.

Issue

Whether the Applicant being a fair price shop is liable to charge GST from the state government against the supply made to them?

Held

The AAR, West Bengal, in Advance Ruling No.09/WBAAR/2023-24 held as under:

• Observed that, the Applicant is engaged in supply of kerosene Oil to the ration card holder and the Applicant is receiving monetary consideration against that supply of from ration card holder and no other monetary or non-monetary consideration is received for that transaction.
• Held that, since no supply was made to State government thus, no tax should be charged in accordance with Section 9 of the Central Goods and Services Tax Act, 2017 ("the CGST Act").