Goods Transport Agency Service : Consignment Note not issued

[Ganeshan Kalyani]

IN RE: M/S. K.M. TRANS LOGISTICS PRIVATE LIMITED [2019 (10) TMI 668 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN]

The appellant M/s. K M Trans Logistics Private Limited, Jaipur, Rajasthan has filed an Appeal u/s 100 under Central Goods and Service Tax Act, 2017 read with section 100 of Rajasthan Goods and Service Tax Act, 2017 against the Advance ruling of the Authority for Advance Ruling, Rajasthan passed on 29.08.2019.

The appellant is registered under GST Act. and is engaged in providing transport services by using its own vehicles/lorries to various manufacturers of motor vehicles like Maruti Suzuki, Toyota, Tata, Hyundai, Mahindra etc. for carrying their vehicles from the factory to the various cities in India where the authorised dealers are located.  The appellant stated that the goods are transported under E-way bill but there will be no generation of consignment note.

In order to confirm the taxability on the transport service provided by own vehicle on the basis of invoice and e-way bill but without issuance of a consignment note the appellant has filed an application for advance ruling before Rajasthan Authority for Advance Ruling. The Rajasthan Authority for Advance ruling have decided and ruled that the appellant is a registered GTA Service provider and the service of transportation without issuance of consignment note is not exempted from GST. Aggrieved by the ruling the appellant has filed present appeal before Appellate Authority for Advance Ruling Rajasthan.

Grounds of Appeal:

The appellant relies on the Notification no. 12/2018-CT dated 07.03.2018 which has amended the e-way bill rules and e-way bill format. The appellant states that the notification requires that the 'Transport Document' to be mentioned in the e-way bill. 'Transport Document' includes, (a) GRN issued by Railways, (b) Air way bill no. issued by airways, (c) Bill of lading issued by shipping lines. The appellant states there is no requirement of mentioning the consignment note in e-way bit. Thus, the appellant submits that, since they do not issue consignment note the service of transportation of goods by own vehicle are out of the purview of GST.

Findings:

The Appellate Authority observes that the appellant has simply stated that they will be transporting raw material to some exporting units. The exact nature or the activity proposed to be undertaken and the parties involved in the proposed activity is not be explained by the appellant. The proposed agreement containing the details of the responsibilities and rights of the parties to the agreement have not been submitted by the appellant. They have also not explained as to why they will not be issuing the consignment notes especially when they are already in the similar business of transportation, through transportation of motor vehicles.

The appellant simply states that they will not be issuing consignment note but they have not explained as to why they will not be issuing the consignment notes and what will be the document which will govern the terms of the transaction between the service provider and the service recipient. In any case, the information provided by the appellant is sufficient to indicate that they will be transporting goods for the client(s) for whom they will provide the services of transportation of goods by road. In order to ascertain the exact nature of services to be provided by the appellant, examination of the contracts / agreements between the appellant and service recipients is necessary. However, we find that since no copy of agreement/contract has been produced before us by the appellant or his authorized representative for examination, the case is being decided on the basis of whatever information has been provided and the nature of services i.e. Goods transport services, Rental services of transport vehicles, Supporting services in transport etc. will be decided based on the information submitted.

The Appellate Authority finds that, a consignment note is a document issued by a GTA against the receipt of goods for the purpose of transporting the goods by road in a goods carriage. Where a consignment note is issued, it implies that the lien on the goods has been transferred and the transporter of the goods becomes responsible for transportation of the goods till its safe delivery to the consignee. In such a situation, consignment note or any other document, by whatever name called, is simply a document showing the responsibility of the transporter and the rights of the persons for whom the goods are transported. By implication, it means that the transporter undertakes the responsibility to transport the goods and promises safe delivery of the goods at the destination. A consignment note is only a document by which the responsibilities and rights are reduced in writing and, therefore, existence or for that matter, absence of the said document cannot have any adverse effect on the responsibilities or rights as agreed between the parties.

The Appellate Authority has visited the website of the appellant. They found that the appellant is serving about 90% of car makers viz. Maruti Suzuki, Toyota, Tata, Hyundai, Mahindra etc., are having Fleet Size of 1250, 35 branch offices, 32 loading stations, 80 service support. From this, it is clear that the appellant transporter is not from unorganized sector of transporters and has a vast network all over India for transportation of goods. They are providing services to various manufacturers of motor vehicles involving transportation of motor vehicles which are carried from the factory to the various cities in India where the authorised dealers are located. In this process of transportation, two types of services either by way of activity described as goods transport agency services or by way of rental services of transport vehicles can be provided. In the instant case of the appellant, if the lien of the goods is transferred and the appellant becomes responsible for the goods till its safe delivery to the consignee, the services will be classifiable as goods transport agency services and issuance of consignment note or its non-issuance does not make any difference so far as the nature of the activity carried out by them is concerned. Mere non-issuance of the consignment note in such cases does not make them entitled for exemption from payment of GST. However. if the vehicles are provided to the client on rental for use as per their requirement, the services will be classifiable as ‘rental services of transport vehicles'.

In view of the above discussion, we find that the services to be provided by the appellant will be liable to payment of GST as specified under Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 (as amended) read with exemption Notifications, under the services relating to transportation of goods or rental services of transport vehicle including supporting service, depending upon the exact nature of activity to be carried out by them.

Order:

We reject the appeal filed by the appellant and hold that the services to be provided by the appellant are leviable to GST, as specified under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) read with exemption Notifications, if applicable, as per the exact nature of services to be provided by them.

Discussions to this article

[KASTURI SETHI]

Dear Sir,

The decision of AAAR Rajasthan is legally correct and proper. Although AAAR's decision has no precedential value yet the department can use this decision as a diective to issue demand SCN to those who avail exemption on the ground of 'non-issuance of consignment note'. This decision of AAAR lays down guidelines not only for the department but also for those who are providing transportation of goods by road.