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2020 (7) TMI 49 - AAR - GSTClassification of supply - GTA Service - Sub-contracting activity - one consignment note issued by the contractor and second consignment note issued by the sub-contractor - GST liability to be discharged on Reverse Charge basis or Forward Charge Basis - Input Tax Credit (ITC) - In the transportation industry, as in the subject case, there are situations where one transporter (in this case, POSCO) takes the help of another transporter (in this case, the applicant) by way of sub-contracting the work. Held that - Any services by way of transportation of Goods by road other than through GTA would be exempt supply as per the entry of notification as quoted in the above paragraph. In the subject case Applicant is providing the transportation service but not as GTA but only as a truck owner to POSCO. Further, a consignment note is proof of the custody of goods during the movement and transportation of goods. For a single transaction and the same movement. of goods, there cannot be multiple consignment notes. Hence there will be one consignment note for movement of goods to a place, to be issued by POSCO. Rate of Tax (GST) - Held That - applicant cannot issue another consignment note for the same goods and for the same transaction where consignment notes are already issued by POSCO. Hence the applicant, in respect of the subject transaction cane of be treated as a GTA and therefore cannot charge GST @12% under Forward Charge mechanism as a GTA.
Issues Involved:
1. Classification of services rendered by the Applicant as a sub-contractor. 2. Applicability of GST @12% under Forward Charge mechanism. 3. Eligibility of POSCO ISDC Pvt. Ltd. to claim credit of the 12% GST. 4. 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 Rendered by the Applicant as a Sub-contractor: The Applicant, M/s. Liberty Translines, sought clarification on whether the service rendered to POSCO ISDC Pvt. Ltd. as a sub-contractor would be classified as GTA service (SAC 996791) when the main contractor (POSCO) is already classified as GTA service (SAC 996791). The Authority concluded that the Applicant's role is limited to providing vehicles to POSCO, which has the transportation contract with the consignee/consignor. The Applicant does not have a direct contract with the consignee/consignor and thus cannot issue a consignment note. Therefore, the service rendered by the Applicant cannot be classified as GTA service but rather as a hiring of vehicles. 2. Applicability of GST @12% under Forward Charge Mechanism: The Applicant queried whether it could charge GST @12% under the Forward Charge mechanism to POSCO in terms of Notification No. 20/2017-C.T. (Rate) dated 22.08.2017. Since the Applicant cannot issue a consignment note for the same goods and transaction where consignment notes are already issued by POSCO, it cannot be treated as a GTA for this transaction. Consequently, the Applicant cannot charge GST @12% under the Forward Charge mechanism as a GTA. 3. Eligibility of POSCO ISDC Pvt. Ltd. to Claim Credit of the 12% GST: The Applicant asked whether POSCO ISDC Pvt. Ltd. would be eligible to claim credit of the 12% GST charged by the Applicant in its invoice under the Forward Charge mechanism. The Authority refrained from answering this question, stating that it should be raised by POSCO ISDC Pvt. Ltd. and not the Applicant. 4. Procedural Correctness of Having Two GTA Service Providers and Two Consignment Notes: The Applicant questioned whether it is procedurally correct to have two GTA Service Providers and two consignment notes for the same movement of goods. The Authority observed that this question pertains to procedural matters, which are not covered under Section 97(2) of the GST Act. Therefore, the Authority did not have jurisdiction to pass any ruling on such procedural matters. Order: 1. The service rendered by the Applicant to POSCO ISDC Pvt. Ltd. as a sub-contractor cannot be classified as GTA service. 2. The Applicant cannot charge GST @12% under the Forward Charge mechanism to POSCO ISDC Pvt. Ltd. 3. The question regarding POSCO ISDC Pvt. Ltd.'s eligibility to claim credit of the 12% GST was not answered. 4. The question regarding the procedural correctness of having two GTA Service Providers and two consignment notes was not answered.
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