2020 (4) TMI 668 - AAAR - GST

Exempt supply/Non-GST supply - Transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the consignment note by the Appellant 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 - Challenge to AAR decision HELD THAT - The appellant is claiming on its official website (www.kmtrans.in) that they are 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 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'. The nature of activity carried out by them is independent of the format of e-way bill rather e-way bill format has no connection whatsoever, with the nature of activities undertaken. In any case, mere non-requirement of mentioning of any detail in E-way Bill does not affect liability of payment of GST on any service unless the service has been exempted through an exemption Notification issued by the Government - the contentions of the appellant concerning format of e-way bill are not relevant to the instant issue. Thus, 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.

Summary

Issues Involved
1. Whether transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the consignment note by the appellant transporter is covered under exempted supply/non-GST supply.
2. Applicability of Rule 42 of the CGST Rules 2017 in cases where there are GST and non-GST supplies with common consumption of input and input services.

Detailed Analysis

Issue 1: Exemption from GST for Transportation without Consignment Note
The appellant, M/s. K.M. Trans Logistics Private Limited, argued that their transport services using their own vehicles without issuing consignment notes should be considered non-GST supply. They relied on Notification No. 12/2018-Central Tax, which amended the E-Way Bill rules, and claimed that the format of the E-Way Bill does not mandate the issuance of consignment notes, thus categorizing their services as non-taxable.

The Rajasthan Authority for Advance Ruling (RAAR) had previously ruled that the appellant, being a registered Goods Transport Agency (GTA), is not exempt from paying GST. The appellant contested this ruling, asserting that E-Way Bills can be generated without consignment notes, and hence their services should be exempt from GST.

Upon review, the appellate authority found that the appellant’s activities fall under the definition of a Goods Transport Agency, which involves the issuance of consignment notes. The authority emphasized that the absence of a consignment note does not alter the nature of the service provided. The consignment note serves to formalize the responsibilities and rights between the transporter and the client, and its non-issuance does not exempt the service from GST.

The appellate authority concluded that the appellant's services are liable to GST as per Notification No. 11/2017-Central Tax (Rate), which specifies the tax rates for various goods transport services. The argument regarding the format of the E-Way Bill was deemed irrelevant to the determination of GST liability.

Issue 2: Applicability of Rule 42 of CGST Rules 2017
The appellant sought clarification on whether Rule 42 of the CGST Rules 2017 applies in cases where there are both GST and non-GST supplies with common consumption of input and input services. The RAAR had ruled that the amount of input tax credit (ITC) should be restricted to the portion attributable to taxable supplies, including zero-rated supplies, as per Section 17(2) of the GST Act read with Rule 42 of the GST Rules, 2017.

The appellate authority upheld this interpretation, confirming that the ITC must be apportioned between taxable and exempt supplies. This ensures that only the ITC related to taxable supplies is claimed, in accordance with the provisions of the GST Act and Rules.

Conclusion
The appellate authority rejected the appeal, affirming that the appellant's services are subject to GST. The services provided by the appellant, whether classified as goods transport services or rental services of transport vehicles, are taxable under the applicable GST notifications. The authority also confirmed the applicability of Rule 42 for apportioning ITC between taxable and non-taxable supplies.

Order
The appeal filed by the appellant is rejected, and it is held that the services provided by the appellant are liable to GST as specified under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended), read with relevant exemption notifications, based on the exact nature of services provided.