Case-Uttarakhand Forest Development Corporation- 117 taxmann.com 949 (AAR- UTTARAKHAND)
Applicant was a Govt, body constituted under Act of State Assembly of Uttarakhand State. They are the sole agency for removal and sale of forest produce from entire forest area in Uttarakhand. Applicant after felling trees gets timber transported to its sale depots. For completion of such process, the transporter use their own trucks and sometimes the transporter hire the trucks for intended purpose. The applicant makes payment of transportation charges to one person who accepted the transport of goods on pre-decided rates by applicant.
The Modus Operandi adopted by the applicant is as follows:
a) Hiring of Truck Transporters by Applicant-Applicant hire truck transporter from open market accordingly as per availability of vehicles and get transported to its sales depot from road head.
b) Filling document called “Ravana” by the Applicant-Since the goods are unqiue in nature, therefore applicant itself fills Form 2.1 for transportation of goods which is called “Ravana”.
c) Characteristics of “Ravana”-
i) Form 2.1 is printed format of applicant to transport timber from one place to another.
ii) The said form carries details of material, vehicle no., name of driver & signature & other details.
d) Goods handed over to Transporter for transportation- The goods are handed over to transporter with signed Form 2.1.
e) Liability of Transporter to transport the goods safely- Transporter has liability to transport goods safely to the destination sales depot of applicant. The truck transporter after delivering the goods receives Form 3.3 from depot officer of applicant which proves that he has delivered the goods.
f) Verification of goods by Depot Officer and handed over to Logging Officer-The depot officer verifies the goods as per Form 2.1 and return the same to Logging officer who dispatched the goods to sale depots.
g) Final Payment to Transporter after verifying Form 2.1- Once verified Form 2.1 is received, Logging officer makes final payment to the transporter.
Following Questions were raised in terms of Notification no. 13/2017-Central Tax (Rate) dated 28-6-2017:
a) Whether a person, unregistered with GST, providing road transport services by his own truck as GTA for RCM under GST;
b) Will issuance of E-way bill, Form 2.1 & 3.3 by or to road transporter who is unregistered with GST, providing road transport services by his own truck, be treated as consignment note for GST-RCM purposes;
c) Whether a person, unregistered with GST providing road transport services by hiring trucks from third party, to applicant, will be treated as GTA for RCM under GST;
d) Will issuance of E-way bill, Form 2.1 & 3.3 by or to road transporter who is unregistered with GST providing road transport services by hiring trucks from third party be treated as consignment note for GST-RCM purposes.
3. Observation by AAR-
a) Term Consignment Note not defined- The term consignment note’ has not been defined in the Act or in the Notification either. In this context we take the help of Explanation to Rule 4B of Service Tax Rules, 1994 wherein the “consignment note” has been defined as a document provided by a goods transport agency against the receipt of goods for the transport of goods by roadways in a goods carriage. The document contains the details like serial number, name of the consigner and consignee, registration number of the goods carriage in which the goods are transported, details of goods being transported, details of the place of origin and destination, and the person who will be liable for the service tax payable from the consignor, consignee or the goods transport agency.
b) Document issued is having all details required for consignment note- It was observed by AAR that in the given case, it can be treated that applicant has made an arrangement in place of consignment note by issuing Form 2.1 in the style of bilty which they handover to the transporters and after delivery of the goods, the transporters receives Form 3.3 from depot officer which proves that he has delivered the goods. After verification of the goods as per Form 2.1, the payment is released to the transporters. We also find that Form 2.1 issued by the applicant contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, etc. Thus, we observe that the said Form is a consignment note in terms of Explanation to the Rule 4B of the Rules. Further the transporter is liable for safe delivery of goods to the destination.
c) Lien on the Goods transferred during the movement by the Applicant to the Transporter- It was observed by AAR that purpose of issuing consignment note indicates that lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods till its safe delivery to the consignee. In the present case also, by issuing Form 2.1 by applicant, goods are handed over to the transporter and transporter becomes responsible for the goods till its safe delivery to the destination.
d) Consignment Note can be in any Form but must have particulars as provided in the Rules-For the sake of argument that for being treated as goods transport agency issuance of consignment note is must. If such argument is accepted than there will be no need to pay GST by a person providing service of goods transport merely on a ground that he is not issuing consignment note. And this will open an avenue for evasion by the service providers. This must not have been the intention of the legislature to not tax the service providers who were not issuing consignment notes.
Services received from the unregistered transporters ‘by the applicant falls under the definition of “GTA’ services in terms of Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017 and the same are covered under ‘RCM’ in terms of Notification No. 13/2017-Central Tax (Rate) dated 28-6-2017. Form 2.1 issued by the applicant can be considered as a consignment note.
Nomenclature of document issued for transportation of goods is irrelevant for deciding service provided by Transporter as GTA but it’s the nature which holds the key.
It might sound to be a bit exaggerated but it is nothing but what we call “substance prevails over form”. Firstly, neither term consignment note has been defined and nor format has been prescribed in GST Act but only particulars have been provided under Rule 54 of CGST Rules, 2017 and secondly intention of legislature is to ascertain whether lien on goods for safe delivery of goods has been transferred from person handing over goods to transporter and whether agency function exists between the two. As has been explained in the E-Flyer issued in respect of GTA Services-
“If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee. It is only the services of such GTA, who assumes agency functions, that is being brought into the GST net. Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA. As a corollary, the services provided by such individual transporters who do not issue a consignment note will be covered by the entry at s.no.18 of notification no.12/2017-Central Tax (Rate), which is exempt from GST.”
Similar principle has been held in the matter of Balasubramanyam Saravana Perumal  111 taxmann.com 507 (AAR – ANDHRA PRADESH) wherein it was observed that issuance of consignment note is sine-qua-non for supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by transporter, service provider will not come within the ambit of goods transport agency. If a consignment note is issued, it indicates that lien on goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till it’s safe delivery to the consignee. It is only the services of such GTA, who assumes agency functions, that is being brought into the GST net. (https://gst-online.com/gstcase-168-taxability-of-gta-on-reverse-charge-or-forward-charge-whether-tax-to-be-paid-on-actual-amount-of-commission-retained-by-him-for-arranging-transport-facility-to-their-customers-or-on-enti/)
Therefore, assuming that Bilty/Lorry Receipt is only consignment note and no one other document would be fatal to ascertainment of correct tax liability of a person.
Every Document which has prescribed particulars and more importantly which establishes that transporter had assumed agency function and lien on goods was transferred (to the transporter) and transporter became responsible for goods till its safe delivery to the consignee will be the document which would clearly establish the services of GTA and tax liability thereon. So next time we don’t have to see name of the document but nature of transaction for Tax under Reverse Charge on GTA Services.