An agent Licensed to supply Kerosene Oil cannot be regarded as a fair price shop: AAR

The Advance Ruling Authority of West Bengal bench consisting of Mr Brajesh Kumar Singh, Joint Commissioner, CGST & CX and Mr Joyjit Banik, Senior Joint Commissioner, SGST ruled that, an agent cannot be regarded as a “Fair Price Shop”.

The applicant is an agent for Indian Oil Corporation Limited (IOCL) and works with fair pricing dealers to distribute Superior Kerosene Oil (SKO) for household use. The applicant exclusively sells to dealers who have been approved by the Director of Consumer Goods, Department of Food and Supplies, West Bengal Government. The District Controller, Food and Supplies, Government of West Bengal, also sets the price at which the applicant can supply as an agent, as well as the components of such prices.

The applicant claims that the Director of Consumer Goods, Government of West Bengal, has granted them a license to supply P.D.S. Kerosene as an agent under the Indian Oil Corporation Limited Oil Marketing Company at an approved selling price to the tagged S.K.Oil Dealers and Permit Holders as directed by the Licensing Authority. The petitioner claims that it is his responsibility to comply with the rules of the West Bengal Kerosene Control Order, 1968.

According to the applicant, he meets the description of “Agent” as defined in West Bengal Kerosene Control Order 1968, paragraph 3(b): “Agent” means a person who has signed a contract with the relevant Oil Marketing Company and has been granted a license as an agent in West Bengal under paragraph 5 of this order, allowing him or her to deal in kerosene as such agent.

The court observed that the license in FORM-B granted by the Director of Consumer Goods, Government of West Bengal has been issued under Paragraph 5 of the West Bengal Kerosene Control Order, 1968. The applicant has been licensed as an Agent to sell P.D.S. Kerosene from the authorized depot at an approved selling price to the Dealers and Permit Holders as directed by the Licensing Authority. The status of the applicant, therefore, undisputedly appears to be an “Agent‟ who has been licensed to sell P.D.S. Kerosene to the Dealers and Permit Holders.

The court further stated that the applicant has executed an agreement with the Oil Marketing Company namely Indian Oil Corporation Limited and has been granted a license under paragraph 5 of the West Bengal Kerosene Control Order, 1968 to carry on trade in Kerosene and thus the applicant satisfies all the conditions to qualify to be an “agent‟.

It is further observed by the court that the applicant, on the other hand, obtains S.K.Oil from the Oil Marketing Company (Indian Oil Corporation Limited in the applicant’s case) and distributes to the dealers, who then distribute it to the ration cardholders. The applicant receives delivery orders for S.K.Oil from the Sub Divisional Controller, Food & Supplies, Ranaghat, which includes I the name of the S.K.Oil Retailer and (ii) the name of the tagged FPS Dealer.

In light of the foregoing facts, the court stated that the applicant cannot be considered a “fair price shop.” Since the entry serial number 11A of Notification No. 1498-FT dated 22.08.2017 [Central Notification No. 21/2017-Central Tax (Rate) dated 22.08.2017] specifically refers supply of services provided by Fair Price Shops (FPS) and the applicant doesn’t qualify to be a “fair price shop‟.

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