Classification of Goods Transport Agency service
Under GST law, transportation of goods by road is an exempt supply. The exemption does not apply where such service is provided by Goods Transport Agency (‘GTA’). Vide this Outlook, we are discussing necessary ingredients required for any service to qualify as a GTA service.
Meaning and scope
The concept of GTA has been borrowed from Service Tax regime. GST law defines GTA under Services Rate and Exemption Notifications[1] as a person who provides service relating to transport of goods by road and issues consignment note (‘CN’). Thereunder, issuance of CN by GTA is a sine qua non for qualifying as a GTA service.
CN is defined as a document issued by a GTA against receipt of goods for transport of goods by road in a goods carriage. CN note makes GTA liable to transport consignment given to it by consignor to specified destination and delivering the same to consignee. CN is akin to a Goods Receipt (‘GR’) or a Lorry Receipt (‘LR’).
Notably, issuance of GR by a common carrier is equally mandated under the Carriage by Road Act, 2007 (‘CR Act’) wherein even format of GR has been prescribed. Therefore, GTA needs to issue CN containing specified particulars. Alternatively, GTA can issue any other document in the form of GR, LR etc. bearing requisite details provided under the CR Act. It is pertinent to note that under the CR Act, for a consignment, there can be only one CN.
Jurisprudence under Service Tax law
On this issue, there are numerous decisions of Courts and Tribunals under the Service Tax law. The principles laid down in these rulings, can be summarized as under:
- Transportation of goods without issuing CN, GR, LR or billty is service of transportation of goods and not GTA service.
- An invoice is not substitute of CN. Invoice creates debt on the recipient of service whereas CN carries with legal burden (contractual undertaking) of responsibility of goods. Similarly, monthly bills do not ipso-facto creates such liability. In one case, it was incorrectly held that vouchers / invoices can be construed as CN.
- Logbook maintained by transporter or transport document issued by District Supply Officer for supply of public distribution items to distribution centre cannot be equated with CN.
Advance Rulings issues under GST
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Reference |
Brief facts |
Ruling by Authority for Advance Ruling (‘AAR’) |
NITYA Comments |
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KM Trans Logistics Private Limited, 2019-VIL-264-AAR |
· Applicant provided transport services to various vehicle manufacturers for transporting vehicles from their factories to authorized dealers. · Applicant transported goods under Invoices and E-way bill. · Applicant did not issue any CN or LR / GR.
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· It is mandatory to mention Transport Document Number in Part-A of E-way bill. · Transport Document is nothing but GR. Therefore, it is mandatory for GTA to issue transport document for transporting goods. · Applicant is a GTA under GST law. |
The AAR erred in equating Transport Document with CN. For qualifying as CN, a document should contain prescribed particulars. |
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Balasubramanyam Saravana Perumal, 2019-VIL-452-AAR
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· Applicant arranged lorries from lorry owners to provide transport facilities to its customers. Applicant acted as agent between lorry owners and customers. · Applicant issued LR for transportation of goods.
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· LR issued by Applicant is nothing but CN as these contain all requisite details. · Applicant is a GTA under GST law. |
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Uttarakhand Forest Development Corporation, 2020-VIL-154-AAR |
· Applicant provided road transport services using its own and hired trucks for transporting timber extracted by it to its sale depots. · Applicant was issuing Form 2.1 (‘Ravana’).
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· Form 2.1 issued by Applicant contained name of consignor and consignee, registration number of goods carriage, details of goods etc. · By issuing Form 2.1, the Applicant handed over goods to transporter and transporter becomes responsible to transport goods safely till their destination. Form 2.1 can be considered as CN. · Applicant is a GTA under GST law. |
The AAR incorrectly equated Form 2.1 with CN. Form 2.1 was issued by the Applicant (who was both consignor and consignee) whereas transportation was done by transporter. CN is required to be issued by transporter. |
NITYA Comments :
The dispute pertaining to classification of service as GTA service or simplicitor transportation of goods service, continues in GST regime as well. The issue is more relevant for taxpayers dealing in exempt goods or having ITC accumulation. The issuance of valid CN continues to be determinative criterion for qualification of a person as a GTA.
[1] Notification No. 11/2017 – Central Tax (Rate) and Notification No. 12/2017 – Central Tax (Rate) dated June 28, 2017
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