2019 (10) TMI 668 - AAR - GST

Classification of supply - Exempt supply or non-GST supply - Transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the LR/GR by the Applicant Transporter - applicability of Rule 42 of the CGST Rules 2017 in case where there is GST and Non GST Supplies and there is a common consumption of input and input services - N/N. 11/2017-Central Tax (Rate) Date 28.06.2017. HELD THAT - While going through the contents of an e-way bill, it is found that, the Transport Document Number 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 GST 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 28.06.2017 (as amended) read with Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 (as amended) - Further, the Rule 42 of the GST Rules, 2017 defines the mechanism of manner of availing Input Tax Credit 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 GST Act read with Rule 42 of GST Rules, 2017.

Summary

Issues:
1. Applicability of GST on transportation services without issuing LR/GR.
2. Interpretation of Rule 42 of the CGST Rules 2017 regarding common consumption of input and input services.

Analysis:
1. The applicant, a service provider offering transport services for motor vehicles, claimed their services as non-GST supply due to not issuing LR/GR. However, the Authority found the services fall under Goods Transport Agency (GTA) service as per GST Act. The presence of a consignment note, invoice, and e-way bill indicates the service as taxable under GST laws.

2. The Authority referred to Section 17(2) of the GST Act and Rule 42 of the CGST Rules 2017 to determine the apportionment of credit for services used partly for taxable and exempt supplies. It concluded that the applicant, providing services for both taxable and exempt goods, must restrict input tax credit to the extent attributable to taxable supplies as per the mentioned provisions.

Conclusion:
The Authority ruled that the applicant, as a registered GTA service provider under GST, is not exempt from paying GST. They must restrict input tax credit based on the proportion attributable to taxable supplies, in accordance with Section 17(2) of the GST Act and Rule 42 of the CGST Rules, 2017.