2020 (10) TMI 1350 - AAR - GST

Taxability under GST - classification of Services - services taken by the applicant from the owner of the Goods transportation vehicle - reverse charge mechanism as per Sec 9(3) of Central Goods and Services Tax, 2017 - rate of GST - claim of ITC for the GST paid on the supply - HELD THAT - As per Section 65B (26) of the Finance Act, 1994, Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment no e, by whatever name called. Therefore, in the Service Tax regime, issuance of Consignment Note (C/N) was integral and mandatory requirement before any road transporter could be brought within the ambit of GTA - it can be seen that issuance of a consignment note is an indispensable condition and is a must for a supplier of service to be considered as a Goods Transport Agency. If consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency. The legal position prevailing under Service Tax is being continued under the GST regime. The services of transportation of goods by road (except services of GTA) continue to be exempt even under the GST regime. In so far as he services of CTA are concerned, if the services (of Goods Transportation) are provided (by the GTA) to specified classes of persons, the tax liability falls upon such recipients under the reverse charge mechanism. If the GTA hires a means of transportation of goods, GST payable would be Nil on such transaction. We thus come to the considered conclusion that the service by way of giving on hire a means of transportation of goods to the applicant GTA, is exigible to Nil rate of GST as stipulated under Notification number 12/2017-CentraI Tax (Rate) dated 28th June 2017. Further when no tax is payable, the question of taking any input tax credit does not arise.

Summary

Issues:
1. Taxability of services provided by the owner of goods transportation vehicle to the applicant.
2. Classification of the taxable services.
3. Liability of the applicant to pay tax under reverse charge mechanism.
4. Applicable tax rate if liability arises.
5. Eligibility of the applicant to claim Input Tax Credit (ITC).

Analysis:

Issue 1: Taxability of services provided by the owner of goods transportation vehicle:
The applicant sought a ruling on whether services received from the owner of goods transportation vehicles are exempt or taxable. The applicant contended that the services fall under the exemption of giving on hire to a goods transport agency, as per Notification No. 12/2017. However, the authority determined that the services are taxable at a Nil rate under the same notification, as they are provided to a goods transport agency.

Issue 2: Classification of the taxable services:
The authority classified the services under Heading No. 9966 as rental services of transport vehicles with or without operators.

Issue 3: Liability of the applicant under reverse charge mechanism:
Since the services are taxable at a Nil rate, the authority ruled that no liability arises under the reverse charge mechanism for the applicant.

Issue 4: Applicable tax rate if liability arises:
As the services are taxed at a Nil rate, there is no applicable tax rate for the transaction.

Issue 5: Eligibility of the applicant to claim Input Tax Credit (ITC):
Since the supply is taxable at a Nil rate, the authority determined that the applicant is not eligible to claim any Input Tax Credit.

The authority referred to relevant notifications and legal provisions to analyze the taxability of the services provided by the owner of goods transportation vehicles to the applicant. They highlighted the definition of a Goods Transport Agency and the conditions for exemption under the GST regime. The ruling clarified the tax treatment, classification, reverse charge mechanism, and ITC eligibility for the services in question, providing a comprehensive analysis based on the facts presented by the applicant.