Transport services to motor vehicle manufacturers is a taxable GTA service and LR/ GR/ consignment note issuance is mandatory: AAR

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Categories: Advance Ruling-New

Synopsis: The Hon’ble AAR, Rajasthan in the matter of M/s. K.M. Trans Logistics Private Limited held that the transport services to various manufacturers of motor vehicles for carrying their vehicles from the factory to the various cities in India is a GTA service and applicant is not exempted from paying GST.

Facts:

M/s. K.M. Trans Logistics Private Limited (“the Applicant”) is providing transport services to various manufacturers of motor vehicles for carrying their vehicles from the factory to the various cities in India where the authorised dealers are located.

The Applicant has entered into an agreement with various parties and will be providing transportation services with own vehicles but without having LR/GR.

Issues:

  • Whether transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the LR/GR by the Applicant will covered under exempted supply/ non-GST supply.
  • Whether Rule 42 of the CGST Rules, 2017 (“CGST Rules”) will also apply in case where there is GST and Non-GST Supplies and there is a common consumption of input and input services?

Held:

The Hon’ble AAR, Rajasthan in Advance Ruling No. RAJ/AAR/2019-20/19 decided on August 29, 2019 held as under:

  • The transport services to various manufacturers of motor vehicles for carrying their vehicles from the factory to the various cities in India where the authorised dealers are located, is a Goods Transport Agency (“GTA”) service under the CGST Act, 2017 (“CGST Act”)/ Rajasthan GST Act (“RGST Act”).
  • Further, the Applicant is carrying supplier’s invoice and e-way bill while providing transport service. E-way bill is applicable as per provisions mentioned in Notification No. 12/2018-Central Tax dated March 7, 2018. As per the format of e-way bill, the Transport Document Number as mentioned in note above is nothing but goods receipt number. To issue an E-way bill, it is mandatory to mention the transport document number in Part A8, without mentioning the same, e-way bill cannot be issued therefore it is mandatory for GTA to issue the transport document and without issuing LR/ GR/consignment note, goods cannot be transported. Therefore, the contention of the Applicant of providing service without issuing LR/GR/consignment note is not correct and is not acceptable.
  • The Applicant is a GTA service provider under CGST Act/ RGST Act and is not exempted from paying GST and thus liable to pay GST as provided under Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 (as amended) read with Notification No. 13/2017-Central Tax (Rate) dated June 28, 2017 (as amended).
  • Further, Rule 42 of the CGST Rules defines the mechanism of manner of availing ITC in cases where input or input services are partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies. Where the goods or services or both used by the registered person partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies as per provisions and procedure prescribed under Section 17(2) of CGST Act/ RGST Act read with Rule 42 of CGST Rules.

Important provisions:

Definition of GTA as under Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 (as amended):

““Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.”

A8 of Form GST EWB- 01: