The global imperative for sustainable energy solutions increasingly shapes policy discussions. For India’s vital goods transportation sector, embracing cleaner fuels like Hydrotreated Vegetable Oil (HVO) is a key step towards environmental goals.
The recent Advance Ruling by the Chhattisgarh AAR, concerning Input Tax Credit (ITC) on HVO for M/s Jai Ambey Roadlines Private Limited, offers a welcome measure of clarity on tax treatment. However, it also highlights the intricate landscape of regulations that industries must navigate, where comprehensive guidance is still being developed across different domains.
The central question put before the AAR by the applicant, represented by Advocate(s) Vivek Saraswat, Abhay Tiwari, and Princee Dhawna, revolved around the eligibility of GST paid on HVO for ITC. The argument was articulated effectively: HVO serves as a direct input for providing taxable transportation services, and thus, its associated GST should be creditable under the provisions of the CGST Act. The legal team further noted that the CGST Act, specifically Section 17(5), does not list fuel for goods transportation as a blocked credit.
The AAR’s decision aligns with this interpretation, affirming that ITC on HVO will be available. This is contingent upon strict adherence to the conditions in Sections 16 and 17 of the CGST Act, including the crucial requirement to substantiate claims as per Section 155. This aspect of the ruling provides valuable clarity for the industry, potentially fostering greater adoption of biofuels by mitigating tax-related costs for transporters. Such clarity is instrumental in encouraging the shift towards more sustainable practices within the sector.
However, the ruling also brings into focus a broader area where clarity is still emerging. The AAR explicitly stated its mandate is limited to GST law and that it was “not authorized to pass any conclusive remarks in the matter” concerning the “legality and technicality as regard the usage of claimed usage of HVO as fuel.” While a tax authority’s primary role is to interpret tax statutes, this observation points to the complex interplay between different regulatory frameworks. The regulations governing the permissibility and technical specifications of fuels in India fall under the purview of various ministries, such as the Ministry of Petroleum and Natural Gas.
This situation presents a nuanced challenge for businesses. While the path for claiming ITC under GST for biofuels appears clearer, the overarching framework governing the use of such fuels in vehicles is multifaceted, involving considerations beyond tax law. Industries embarking on the transition to alternative fuels seek comprehensive regulatory certainty that spans all relevant government departments. The absence of a single, unified position across all regulatory bodies can incrementally add to the complexity faced by businesses aiming to comply with all legal requirements.
The current landscape, therefore, represents a period of ongoing development in policy integration. While the AAR has provided important guidance on the tax dimension, a more holistic synthesis of regulations from all relevant authorities would further empower the transportation sector. Such integrated clarity would ensure that investments in sustainable practices are not only tax-efficient but also fully aligned with all operational and environmental legal stipulations. This ongoing process of policy development across various governmental spheres is crucial for creating an environment where industries can confidently pursue sustainable transitions without navigating disparate interpretations of legality.
Ruling Details
Applicant’s Name: Jai Ambey Roadlines Private Limited
Ruling Date: 30/09/2025