2025 (2) TMI 720 - AAR - GST

Exemption from GST - Whether the activity of the transportation of goods by the Applicant will be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT - On perusal of the meaning of the GTA it is clearly seen that issuance of the consignment note is an essential condition for any person to act as GTA. If such a consignment note is not issued by the transporter the service provider will not come within the ambit of GTA. If a consignment note is issued it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till it s safe delivery to the consignee. Interpretation of meaning of term consignment note - HELD THAT - On perusal of the meaning of the term consignment note it is conspicuous that the goods are received by the goods transport agency either from the consignor or the consignee of the goods the details of which are mentioned in the consignment note along with the description of the goods being transported. The service of transportation of goods is sub-contracted to the applicant by the Principal GTA. Effectively it appears that the contract to undertake transportation of goods is given by the consignee/consignor to Principal GTA and not to the applicant. The consignee/consignor may not be aware that the transportation will be done by the applicant. It is also possible that such sub-contract may/can also be given to some other party by the Principal GTA - the applicant is giving only vehicles to Principal GTA and thus it is Principal GTA which has the transportation contract with the consignee/consignor. Thus the transaction in this case would be one of renting of vehicles and not that of a Goods Transport Operator. In the transportation industry as in the subject case there are situations where one transporter takes the help of another transporter by way of sub-contracting the work. The other person bills the first transporter for sub-contracting service and the main transporter is the actual service receiver. It is generally seen that sub-contractor person is actually providing transportation service on behalf of the first transporter. As per the definition of GTA in the GST Laws it is very clear that person who issues consignment note will be treated as goods transport agency. In the subject case Principal GTA issues consignment note which is further stamped by its consignee on delivery of the goods and is therefore a GTA for this transaction. 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. Hence the activity of the transportation of goods by the Applicant is not eligible for exemption under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017. Conclusion - The applicant is desirous of opting the exemption available under entry no. 18 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 but this is merely by stretch of imagination on part of the applicant as the activity or service purported to be rendered is wholly outside the scope of this notification as the applicant s business activity is only rental services of transport vehicles. Rental services of transport vehicles is notified under notification no.11/2017-Central Tax (Rate) dated 28.06.2017. The activity of the transportation of goods by the Applicant will not be exempted under entry no. 18 of Notification no.12/2017-Central Tax (Rate) dated 28.06.2017.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the activity of transportation of goods by the Applicant qualifies for exemption under entry no. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. This involves determining whether the Applicant's activities classify them as a Goods Transport Agency (GTA) under the GST Act.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework revolves around the definition and conditions for a service to be classified under the Goods Transport Agency (GTA) as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The essential criterion is the issuance of a consignment note by the transporter, which signifies the assumption of responsibility for the goods.

The Applicant cites precedents like the CESTAT Principal Bench, Delhi in Gunesh Logistics Vs. Commissioner of C.Ex. & Service Tax, Jaipur-I, which outlines the conditions under which a service qualifies as a GTA service, emphasizing the issuance of a consignment note.

Court's Interpretation and Reasoning

The Tribunal examined whether the Applicant could be considered a GTA by evaluating if they issue consignment notes, which is a critical factor in determining GTA status. The Tribunal noted that the Applicant's role was limited to providing vehicles to the Principal GTA, which directly deals with the consignor/consignee and issues consignment notes.

The Tribunal emphasized that the issuance of a consignment note is a sine qua non for being classified as a GTA. The Applicant's activity was deemed as renting vehicles rather than providing GTA services, as they did not issue consignment notes to the consignor/consignee.

Key Evidence and Findings

The Tribunal found that the Applicant's operations involved sub-contracting transportation services to the Principal GTA, which maintained the primary contract with the consignor/consignee. The Principal GTA was responsible for issuing consignment notes, a crucial element in defining GTA services.

The Tribunal also referenced the Maharashtra Appellate Authority's ruling in a similar case, which concluded that without direct contracts with consignors/consignees and issuance of consignment notes, the Applicant's services could not be classified as GTA services.

Application of Law to Facts

The Tribunal applied the legal definition of a GTA, which requires the issuance of a consignment note, to the Applicant's activities. Since the Applicant did not issue consignment notes and merely provided vehicles to the Principal GTA, their services were classified under "rental services of transport vehicles" rather than GTA services.

Treatment of Competing Arguments

The Applicant argued that their activities should be classified as GTA services because they issue consignment notes to the Principal GTA. However, the Tribunal found that the issuance of consignment notes to the consignor/consignee, not the Principal GTA, is the determining factor for GTA classification. The Tribunal dismissed the Applicant's argument, noting that the Principal GTA, not the Applicant, maintained the primary contractual relationship with the consignor/consignee.

Conclusions

The Tribunal concluded that the Applicant's activities do not qualify for exemption under entry no. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they do not meet the criteria for being classified as a GTA. The Applicant's services were classified as rental services of transport vehicles, subject to taxation under a different notification.

SIGNIFICANT HOLDINGS

The Tribunal held that the issuance of a consignment note is an essential condition for classification as a GTA. The ruling emphasized that merely owning trucks and renting them out for transportation does not qualify as providing GTA services.

The Tribunal's final determination was that the Applicant's transportation activities are not exempt under entry no. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they do not fulfill the necessary conditions for GTA classification.