Value of ‘System Use Gas’ used for providing re-gasification service is includible in GST taxable value: AAR

Case Details: Authority for Advance Rulings, Gujarat Shell Energy India (P.) Ltd., In re - [2022] 139 taxmann.com 298 (AAR-GUJARAT)

Judiciary and Counsel Details

• • Atul Mehta & Arun Richard, Member
  • Ms Priyanka Rathi, Adv. & Abhishek Nolkha for the applicant.

Facts of the Case

The applicant was engaged in supply of services of re-gasification of LNG imported by customers. During process of re-gasification, there would be inherent loss of gas which would be called as System Use Gas (SUG). It entered into agreement with customers that re-gasification charges would be computed on the basis of LNG delivered. It filed an application for advance ruling to determine whether value attributable to SUG would be subject to levy of GST and includible in the consideration for re-gasification services.

AAR Held

The Authority for Advance Ruling observed that in the instant case, SUG would not be evaporated but it would be used for certain activities, either for running the re-gasification equipment or used for safety procedures by venting; and used for maintenance procedures. If SUG had been purchased, the same would have been added to cost of provision of re-gasification service. Therefore, SUG value shall be part and parcel of supply of re-gasification service and would fall within the definition of consideration for the supply. Thus, it was held that value of SUG would be includible in taxable value and GST shall be payable thereon.