2021 (7) TMI 1393 - AAR - GST

Classification of supply - rate of tax - activity of transportation of coal from the mine to the railway siding at Pakur, till the time the railway siding is made operational at the mine - an independent activity or part of supply of mining service - exemption available to the applicant as 'transportation of goods by a person other than GTA' - liability to pay GST under RCM on the transportation services received from the transporters, as they are not issuing consignment note. HELD THAT - The price charged by the supplier for both the services are separately mentioned in the contract held in this regard. The bills/invoices are also separately raised in this regard. Moreover, none of the services can be considered as predominant over the other service. Both the services are important for the service recipient and accordingly invited tender and held contract for availing both the services. These services in any way cannot be considered as naturally bundled services as order of both the services can be awarded to separate service providers. Also they are not supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply nor are these services supplied made in conjunction with each other for a single price. In this case it can be treated that the applicant has made an arrangement in place of consignment note by issuing different forms in their own style which they handover to the transporters and after delivery of the goods, weighment challans have been issued at railway siding which proves that goods have been delivered safely. After verification of the quantity, the payment is released to the transporters in due course as per the clauses of agreement - 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 collective reading of Work Order awarded to the transporter with the requisite forms required to be filled/signed, makes it amply clear that the transporter becomes responsible for the goods till its safe delivery to the destination. As per the provisions of Section 9(3) of the Act, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both - the services rendered by the 'Goods Transport Agency' in short GTA falls under 'Reverse Charge Mechanism' (in short RCM) and the applicant is liable to pay GST on the same under RCM after appropriate valuation of the service. GST applicable in this case has been covered under Entry 9(iii) of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 (Heading 9965), as amended, subject to conditions mentioned therein, i.e., a GST Rate of 5% will be applicable provided that credit of input tax credit charged on goods and services used in supplying the services has not been taken. However, Entry No. 9(iii) of the said Notification has been substituted vide Notification No. 20/2017-CT (Rate) dated 22.08.2017 for including an alternative GST Rate of 12%, provided that the transporters opted to pay so.

Summary

Issues Involved:
1. Classification of the activity of transportation of coal from the mine to the railway siding.
2. Availability of exemption for transportation of coal as 'transportation of goods by a person other than GTA'.
3. Liability to pay GST under RCM on transportation services received from transporters not issuing consignment notes.

Detailed Analysis:

Issue 1: Classification of Transportation Activity

Question: Whether the activity of transportation of coal from the mine to the railway siding at Pakur is an independent activity or part of supply of mining service?

Analysis:
The applicant argued that the mining services and transportation of mined coal are two distinct services. The authority observed that both services are independently priced and billed, and neither service is predominant over the other. They are not naturally bundled nor supplied in conjunction for a single price. The authority referenced the ruling of the Hon'ble Supreme Court in the case of CCE Raipur Vs Singh Transporters to support their conclusion.

Conclusion: The transportation of coal from the mine pit-head to the railway siding is an independent activity.

Issue 2: Exemption Availability for Transportation Service

Question: If the transportation is an independent activity, whether exemption is available to the applicant as 'transportation of goods by a person other than GTA'?

Analysis:
The applicant submitted invoices and agreements showing separate charges for mining and transportation. The authority noted that the applicant arranges transportation services and is not acting as an agent or partner of PCMPL. The transportation activity is considered an "outward supply" of support services, thus falling under the category of "other supporting transport services" (Heading 996793) and chargeable to GST at 18%.

Conclusion: The transportation work supplied by the applicant is chargeable to GST at 18% (CGST 9% + SGST 9%) and does not qualify for exemption as 'transportation of goods by a person other than GTA'.

Issue 3: GST Liability under RCM for Services from Transporters

Question: Whether the applicant is liable to pay GST under RCM on the transportation services received from the transporters, as they are not issuing consignment notes?

Analysis:
The authority examined the definition of "Goods Transport Agency" (GTA) and the role of consignment notes. It was found that the applicant maintains detailed documentation akin to consignment notes and that the transporters assume responsibility for the safe delivery of goods. The authority concluded that the services received from unregistered transporters fall under the definition of GTA services and are covered under RCM.

Conclusion: Services received from unregistered transporters by the applicant fall under the definition of "GTA" services and are covered under RCM, making the applicant liable to pay GST on these services.

Order:
1. Question (a): The activity of transportation of coal from the mine pit-head to the railway siding is an independent activity.
2. Question (b): The transportation work supplied by the applicant is chargeable to GST at 18% (CGST 9% + SGST 9%).
3. Question (c): Services received from the unregistered transporters fall under the definition of "GTA" services and are covered under RCM, making the applicant liable to pay GST on these services.

This ruling is valid subject to the provisions under Section 103(2) until and unless declared void under Section 104(1) of the GST Act.