2020 (7) TMI 78 - AAR - GST

Classification of Services - GTA Services - consignment note issued by the Applicant - actual transportation done by third party - transportation services taken to dispatch of consignments for POSCO group companies between Customs Port and the place of business of POSCO group companies for import/export consignments and From POSCO group companies to their customer in India. What will be the classification of the services (whether under service codes 996511 or 996791 or 996799 or any other) of the Applicant in case the Applicant issues the consignment note however, the actual transportation is done through the third-party transporter (who also issues the consignment note)? - HELD THAT - The 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. It is found that they are rendering Goods Transport Services to POSCO group of companies directly - the services supplied by them would be covered under Heading 9965 which covers Goods Transport Services , Sub Heading 99651 which covers Land Transport service of Goods and further under SAC 996511. What will be the applicable GST rate on the above service? - HELD THAT - Having held that the services supplied by the applicant to POSCO group of companies are covered under Heading 996511, we have no hesitation in holding that GST applicable in this case will be covered under Entry 9(iii) of the Notification 11/2017(CT) Rate dated 28 June 2017 subject to conditions mentioned therein i.e. a GST Rate of 5% will be provided that credit of input tax credit charged on goods and services used in supplying the services has not been taken and a GST Rate of 12% will be applicable provided that the goods transport agency opting to pay central tax @ 6% under this entry on all the services of GTA supplied by it. Whether the Applicant would be eligible to avail the input tax credit of the 12% GST charged by the third-party transporters? - HELD THAT - As far as the services provided by third party transporter to applicant are concerned, prima facie it appears that the third party transporters are classifying their services under Entry 22 (b) of Notification 12/2017 dt. 28.06.2017 and are not levying any tax on the services supplied by them to applicant. As no GST is paid by third party transporter, the applicant will not be entitled for any input tax credit on services provided by third party transporter. Whether the transporter would be right in charging GST @12% under forward charge mechanism to Applicant in terms of Notification No 20/2017-Central Tax (Rate) dated 22 August 2017 when Applicant as the main contractor, is already charging GST @ 12% under the same Notification, which is going to remain unchanged? - HELD THAT - The question raised does not pertain to supply undertaken or to be undertaken by the applicant and therefore in view of the provisions of Section 95 of the CGST Act, 2019, this authority cannot answer the question. Procedurally, is it correct to have two GTA Service Providers and two consignment notes for the same movement of goods, one issued by the Applicant as main contractor and the other by transporters sub-contractor? - HELD THAT - The question raised here pertains to procedure to be followed. The question does not fall under Section 97 (a) to (g) of Section 95 of the CGST Act, 2019, and therefore this authority refrains from answering the said question.

Issues Involved:
1. Classification of services when the applicant issues consignment notes but actual transportation is done by a third-party transporter.
2. Applicable GST rate on the services provided by the applicant.
3. Eligibility of the applicant to avail input tax credit for the GST charged by third-party transporters.
4. Validity of the transporter charging GST under the forward charge mechanism when the applicant is already charging GST.
5. Procedural correctness of having two GTA service providers and two consignment notes for the same movement of goods.

Issue-Wise Detailed Analysis:

1. Classification of Services:
The applicant provides logistics solutions and issues consignment notes while actual transportation is done by third-party transporters. The service classification falls under Heading 996511, which covers "Road transport services of Goods including letters, parcels, live animals, household & office furniture, containers etc. by refrigerator vehicles, trucks, trailers, man or animal drawn vehicles or any other vehicles." The applicant qualifies as a Goods Transport Agency (GTA) because they provide services in relation to the transportation of goods by road and issue consignment notes.

2. Applicable GST Rate:
The services provided by the applicant are covered under Entry 9(iii) of Notification 11/2017(CT) Rate dated 28 June 2017. The GST rate applicable is 5% provided that the credit of input tax charged on goods and services used in supplying the services has not been taken. Alternatively, a GST rate of 12% is applicable if the applicant opts to pay central tax at 6% on all the services of GTA supplied by it.

3. Eligibility to Avail Input Tax Credit:
The applicant can avail input tax credit if they opt to pay GST at the rate of 12%, subject to satisfying the provisions of Chapter V of the CGST Act, 2017. However, third-party transporters are classifying their services under Entry 22(b) of Notification 12/2017 and are not levying any tax on the services supplied to the applicant. Consequently, the applicant cannot avail input tax credit on services provided by third-party transporters.

4. Validity of Transporter Charging GST:
The question regarding the validity of the transporter charging GST under the forward charge mechanism when the applicant is already charging GST does not pertain to the supply undertaken by the applicant. Therefore, this authority cannot answer the question as per Section 95 of the CGST Act, 2019.

5. Procedural Correctness of Two GTA Service Providers:
The question about the procedural correctness of having two GTA service providers and two consignment notes for the same movement of goods does not fall under Section 97(a) to (g) of Section 95 of the CGST Act, 2019. Hence, this authority refrains from answering the said question.

Order:

Q. No. 1: The services supplied by the applicant are classified under Heading 996511.

Q. No. 2: The applicable GST rate is covered under Entry 9(iii) of Notification 11/2017(CT) Rate dated 28 June 2017, with a GST rate of 5% if input tax credit is not taken, and 12% if the applicant opts to pay central tax at 6% on all GTA services supplied.

Q. No. 3: The applicant cannot avail input tax credit for services provided by third-party transporters as they are not charging any GST.

Q. No. 4: This question is not answered as it does not pertain to the supply undertaken by the applicant.

Q. No. 5: This question is not answered as it pertains to procedural correctness, which is outside the scope of Section 97(a) to (g) of Section 95 of the CGST Act, 2019.

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