Skip to content

#GSTCase-229-Compilation of Judgement on Applicability of RCM on Transportation of Exempted Goods, Support Services provided by GTA, Whether E-Way Bill can be held as a consignment note, Basics of consignment note, Can there be Multiple GTA for transportation of Goods, Hiring of Transportation Vehicles to GTA

Case-1-Sanjay Kumar Jain [2019] 108 514 (AAR- RAJASTHAN)
The cotton seed oil cake is not exempted under the GST Act in general and is also not covered under Notification No. 12/2017 (as amended from time to time). Thus, being recipient of GTA services the applicant is liable to pay tax under Reverse Charge Mechanism.
Case-2-Balasubramanyam Saravana Perumal [2019] 111 507 (AAR – ANDHRA PRADESH)
In view of the legal provisions governing the taxability of GTA services, the documents furnished by the applicant are examined and found that;
-The applicant is registered with GST as a service provider;
-The applicant is issuing lorry receipts (LR in brief) under the name & style M/s Chitra Transport, containing details of GST registration, truck number, date of issue of LR, consigner name and consignee name with address, nature of the goods for transport, invoice issued by the consigner, weight, freight charges and also mentions who has to discharge service tax. Therefore, it is clear that the applicant is issuing consignment note and is providing transport service and is the “Goods Transport Agency” within the definition of clause (ze) of notification no.l2/2017-Central Tax (Rate) dated 28.06.2017;
-Tax on the Transport of Goods by Road services (GTA service) rendered by the applicant to any customers registered under GST and located in the taxable territory, unless exempted under the notification no. 12/2017 CT (Rate) dated 28.06.2017, is payable by the recipient/s of the service under reverse charge mechanism (RCM) prescribed under notification no. 13/2017-CT (Rate) dated 28.06.2017 as amended by notification no. 22/2017 -CT (Rate) dated 22.08.2017;
-The rate of tax on the GTA services is 5% ( 2.5% CGST + 2.5% SGST) subject to satisfying the conditions as prescribed under notification no. 11/2017 – CT (Rate) dated 28.06.2017 as amended by notification no. 20/2017-CT ( Rate) dated 22.08.2017, as detailed in para 6.4 above;
-In case, the said conditions are not satisfied, the rate of GST is 12% ( 6% CGST +6% SGST) and the applicant being the provider of Goods Transport Agency service has to pay the said tax;
-In the case of supporting services in transport other than those mentioned in sl. no. 11 (i) (Heading 9967) & in sl. no. 9(i) to 9(vi) of notification no. 11/2017 CT (Rate) dated 28.06.2017 would attract GST @ 18% (9% CGST + 9% SGST) and GST rate is 18% (9% CGST + 9% SGST).
-Where GST is payable under reverse charge or payable under forward charge, the profit i.e. commission earned by procuring/ obtaining trucks from the owners is not taxable in the hands of GTA (Goods Transport Agency).
Case-3-K.M. Trans Logistics (P.) Ltd [2020] 117 609 (AAAR-RAJASTHAN)
Format of E-Way Bill, in whatever manner designed or amended, is not relevant for deciding the classification of the activity carried out by them. The nature of activity carried out by them is independent of format of E-Way Bill rather E-Way Bill format has no connection whatsoever, with the nature of activities undertaken. In any case, mere non-requirement of mentioning of any detail in E-Way Bill does not affect liability of payment of GST on any service unless the service has been exempted through an exemption Notification issued by the Government.
Observation-The observation of AAAR regarding taxability of GTA Services was in line with the E-Flyer issued in respect of GTA Services and judgement in the matter of Balasubramanyam Saravana Perumal [2019] 111 507 (AAR – ANDHRA PRADESH).
Case-4-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 of notification no.12/2017-Central Tax (Rate), which is exempt from GST.”
Case-5-Uttarakhand Forest Development Corporation [2020] 117 949 (AAR- UTTARAKHAND)-
7.4 In the instant case we find that the applicant itself fills Form 2.1 for transportation of goods from one place to another. The said form carries details of material, vehicle No., name of driver & signature & other details. Thereafter the goods are handed over to transporter with signed Form 2.1. The 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. Thereafter depot officer verifies the goods as per Form 2.1 and return the same to Logging officer who dispatched the goods to sale depots. After receiving verified Form 2.1, the Logging officer makes final payment to the transporter.
7.5 We find that in this case it can be treated that the 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.
7.6 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.
7.7 We further observe that the purpose of issuing consignment note 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. In the present case also, by issuing Form 2.1 by the applicant, the goods are handed over to the transporter and transporter becomes responsible for the goods till its safe delivery to the destination. 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.
7.8 In view of the above discussion & findings, we hold that Form 2.1 may be treated as consignment note, thus the condition of GTA is fulfilled and thus the services procured from unregistered person for transportation of goods fall under the definition of GTA and the applicant is liable to pay GST on the same under RCM.
Case-6-Liberty Translines, [2020] 117 570 (AAR – MAHARASHTRA)
Thus, effectively it appears that, the contract to undertake transportation of goods is given by the consignee/consignor, to POSCO and not to the applicant. The consignee/consignor may not be aware that the transportation will be done by the applicant. It is also possible that such sub-contract may/can also be given to some other party by POSCO. We find that, because POSCO deals with the consignee/consignor directly, they also issue E-way bills and also consignment notes. The role of the applicant is to just provide their vehicles to POSCO as and when called for and to this extent we are of the opinion that the applicant is giving only vehicles to POSCO and thus it is POSCO which has the transportation contract with the consignee/consignor. Thus we find that the transaction in this case would be one of hiring of vehicles and not that of a Goods Transport Operator.
5.3.3 Applicant has submitted that, legally there can never be a situation where a transporter does not issue a consignment note in view of the Carriage By Road Act, which requires a common carrier to compulsorily issue a Goods Receipt which is the same thing as a consignment note. We find that in the subject situation, it is POSCO who are transporters and in view of the fact that they do not have enough vehicles, at certain times vehicles are procured from the applicant. The fact in this matter clearly reveals that the applicant is just required to provide the vehicles to POSCO. The details of the consigner and consignee will be shared by POSCO with the applicant to enable the lifting of goods from the consignor and delivery to the consignee. It does not appear that there is an intention by the consignee/consignor to award the transportation contract to the applicant. The situation would have been different if the contract for transportation of goods was received by the applicant from the consignee/consignor.
5.3.4 Applicant has submitted that there is no requirement under GST law that there cannot be more than one consignment notes. A perusal of the GST Laws also do not reveal that there can be more than one consignment note in one particular transaction. In any transaction of transportation, generally it is the transporter having a contract with the consignor/consignee who has to issue consignment notes as is being done in the subject case by POSCO.
5.3.7 As per Notification No. 11/2017-C.T. (Rate), dated 28-6-2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA. In the subject case, it is POSCO which has a contract for transportation of goods from the consignee/consignor. It will therefore be POSCO which is responsible for the safe delivery of goods to the consignee. POSCO has an arrangement with the applicant whereby the applicant supplies vehicles for POSCO to perform the act of transportation as per the contracts.
5.3.8 What we see is that there is a difference between a GTA and a person who owns truck commonly known as transporter who may give transportation service either by himself or through a transport agent i.e. GTA. We have already mentioned above that a consignment note is a necessary qualification to be considered as a GTA as per the explanation in Notification No. 11/2017 C.T. (Rate), dated 28-6-2017 and the provision of Service shall be ‘transport of goods by road’.
5.3.9 In the transportation industry, as in the subject case, there are situations where one transporter (in this case, POSCO) takes the help of another transporter (in this case, the applicant) by way of sub-contracting the work. The other person (in this case, the applicant) bills the first transporter (in this case, POSCO) for sub-contracting service and the main transporter is the actual service receiver. It is generally seen that sub-contractor person is actually providing transportation service on behalf of the first transporter. As per the definition of GTA in the GST Laws, as stated above it is very clear that person who issues consignment note will be treated as goods transport agency. In the subject case, POSCO issues consignment note, which is further stamped by its consignee, on delivery of the goods and is therefore a GTA for this transaction. Any services by way of transportation of Goods by road other than through GTA would be exempt supply as per the entry of notification as quoted in the above paragraph. In the subject case Applicant is providing the transportation service but not as GTA but only as a truck owner to POSCO. Further, a consignment note is proof of the custody of goods during the movement and transportation of goods. For a single transaction and the same movement of goods, there cannot be multiple consignment notes. Hence there will be one consignment note for movement of goods to a place, to be issued by POSCO.
Case-7-Saravana Perumal [2020] 113 288 (AAR – KARNATAKA)- RCM on GTA Services
The services of providing vehicles on hire basis to another GTA is covered under entry No. 22 of Notification No. 12/2017 – Central Tax (Rate), dated 28.06.2017 and this entry exempts the services by way of giving on hire a means of transportation of goods to a goods transport agency.
Therefore, the services provided as a GTA are different from the services provided by way of giving vehicles on hire basis to another GTA & hence are independent of each other so far as tax treatment is concerned. Further there is no provision in the law barring person being a GTA from renting the vehicle to another GTA. However, the tax treatment of these transactions would be as explained earlier.
Case-8-Posco India Steel Distribution Center (P.) Ltd. [2020] 117 754 (AAR – MAHARASHTRA)
It has been submitted that Applicant, either provides transportation services on its own account, or engages a third-party transporter. In the former case, applicant engages its own fleet of vehicles and in the latter situation, the Applicant enters into a back to back arrangement for transportation of goods with Transport Vengors/Transport Agencies (third party). In both the situations, it is the applicant who are issuing the Consignment Notes, which are stamped by the receiver of the transported goods. The applicant has also submitted that the third party transporters also issue Consignment Notes which are filed in their respective offices and which are not stamped by the Consignee of the said goods. It has also been submitted that the Applicant has been acting as a Goods Transport Agency (GTA) issuing valid consignment notes in respect of the goods transported and delivered and charging GST @ 12% on such transportation under forward charge mechanism.
As per the Explanatory Notes to the scheme of Classification of Services, the service code Heading 996791 includes; freight brokerage services; freight for warding services (primarily transport organization or arrangement services on behalf of the consignor or consignee); freight consolidation and break-bulk services.
Service code Heading 996799 includes; type rating services (aircraft-specific permits for flying a particular type of plane); liquefaction and regasification of natural gas for transportation; radio navigational aid locating services, such as GPS (global positioning system) provision.
From the submissions made by the applicant we find that applicant is a ‘GTA’ providing Goods Transport Agency Services’ and the services provided by them are transport of goods by road. In the subject case, they have a contract/agreement with POSCO group companies to provide transportation services wherein they undertake dispatch of consignments by road for POSCO group companies. We find that they are rendering Goods Transport Services to POSCO group of Companies directly.
In view of the discussions made above, in our opinion these services supplied by them would be covered under Heading 9965 which covers ‘Goods Transport Services’, Sub-Heading 99651 which covers ‘Land Transport services of Goods’ and further under SAC 996511.