Name of the Applicant: Premier Vigilance & Security Pvt Ltd
Facts of the case:
- The Applicant is provide the security services to the Bank & seeks a Ruling on chargeability of GST on the Toll Taxes reimbursed by its clients or the ability to claim it as a deduction under Rule 33 from the value of supply, being expenditure incurred as a pure agent under the CGST/WBGST Acts.
- The Applicant also transports cash/coins/bullion in specially built vehicles or Customized Cash vans (CCVs). In course of such transportation, the vehicles move along National and State Highways and the Applicant pays toll charges to both NHAI and State Authority, which is reimbursed by the client Banks.
- According to rule 33 of the GST Rules which deal with pure agent concept:
“the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,
- the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient;
- the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and
- the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.”
According to explanation for the above rule pure agent means:
- enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
- neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply;
- does not use for his own interest such goods or services so procured; and
- Receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.
AAR held that,
- Applicant is the owner of the vehicle, as being the owner of the vehicle such liability to pay taxes is compulsory in nature.
- Reimbursement of such cost is no disbursement, but merely the recovery of a portion of the value of supply made to the Banks.
- Toll charges paid are not, therefore, to be excluded from the value of supply under Rule 33.
- GST shall, therefore, be payable at the applicable rate on the entire value of the supply, including toll charges paid.