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Meetu Kumari | Aug 29, 2022 | Views 34912

 Value of SUG for Re-gasification Service Supply is an Indispensable Part of Taxable Value, Liable to GST

 Value of SUG for Re-gasification Service Supply is an Indispensable Part of Taxable Value, Liable to GST

M/s Shell Energy India Private Limited owns and operates a Liquefied Natural Gas re-gasification terminal (Terminal) at Village Hazira, District Surat, Gujarat and is, inter alia, engaged in providing services of re-gasification of LNG imported by Customers at the Hazira Port. M/s Shell supplies services of re-gasification of LNG imported by Customers. M/s Shell also provides certain incidental and ancillary services related to unloading of LNG, storage of LNG in cryogenic tanks and delivery of Regasified LNG (RLNG) and these services are included in the scope of re-gasification services rendered by M/s Shell.

GAAR was asked to decide whether the value attributable to SUG stipulated in the Agreement between the Applicant and Customers is subject to the levy of GST and therefore, liable to be included in the consideration for re-gasification services determined as per Section 15 of the CGST Act.

It was held by the authority that the scope of Re-gasification Services covers not only the services related to regasification of LNG into RLNG on behalf of M/s Shells customers but includes allied, incidental and ancillary services such as receipt of LNG Carriers at the Port, unloading of LNG from LNG carriers and its receipt at Terminal receipt point, temporary storage of LNG in storage tanks and delivery of RLNG to the customers. Thus, this SUG was a cost for Supplier of Service M/s Shell and thereby to be allocated into the cost of provision of Regasification Service Supply.  By this business contract, M/s Shell translates the cost of SUG required into SUG value by raising GST Tax invoices to its customers under the item description of the value of SUG. Also, in cases where measurement uncertainties are negative, this translates that System uses the gas provided by its customers, as per the contract is retained by M/s Shell, as negative measurement means the excess of Gas and not a shortage of gas. Thus, the value of SUG is an indispensable part of taxable value, for the Re-gasification service supply by M/s Shell and is liable to GST.

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