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TMI Blog2021 (7) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in conjunction with each other in the ordinary course of business, one of which is a principal supply nor are these services supplied made in conjunction with each other for a single price. In this case it can be treated that the applicant has made an arrangement in place of consignment note by issuing different forms in their own style which they handover to the transporters and after delivery of the goods, weighment challans have been issued at railway siding which proves that goods have been delivered safely. After verification of the quantity, the payment is released to the transporters in due course as per the clauses of agreement - The purpose of issuing consignment note indicates that the lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods till its safe delivery to the consignee. In the present case also collective reading of Work Order awarded to the transporter with the requisite forms required to be filled/signed, makes it amply clear that the transporter becomes responsible for the goods till its safe delivery to the destination. As per the provisions of Section 9(3) of the Act, the Government may, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailway siding at Pakur, till the time the railway siding is made operational at the mine, is an independent activity or part of supply of mining service? (b) If the provision of transportation of coal is an independent activity, whether exemption is available to the applicant as 'transportation of goods by a person other than GTA'? (c) Whether the applicant is liable to pay GST under RCM on the transportation services received from the transporters, as they are not issuing consignment note? 2. At the outset, we would like to make it clear that the provisions of both the CGST Act and the JGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the JGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/JGST Act would be mentioned as being under the GST Act . HEARING 3. The case was taken up for preliminary hearing on 08/09.02.2021 with respect to admission or rejection of present application wherein Shri V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) Pursuant to receipt of the contract from WBPDCL, PCMPL has sub contracted the entire work i.e. removal of overburden, extraction of coal, storage handling and the temporary transportation of coal to the designated delivery points to the applicant on back to back basis by entering into an Operation and Maintenance (O M) Agreement dated 12th December 2018. (v) As per O M agreement, PCMPL shall pay Rs. 569.66 per ton towards base mining charge and Rs. 142.42 per ton towards Transportation Handling Charges to the applicant. In the O M agreement the mining charges for extraction of coal from the mines and transportation handling charges for transportation of coal from the mine to the railway siding at Pakur and loading onto railway rakes is agreed separately. (vi) For the purpose of transportation of coal from the mine to the railway siding at Pakur, the applicant is availing transportation services from truck owners/operators (transporters). However, the transporters are not issuing consignment note or any similar document to the applicant towards transportation of coal from the mine to the railway siding. (vii) As per terms of contracts, the transporters deploy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant in relation to their Question No. (a) argued that the mining services of coal provided by them and transportation of mined coal to railway siding are two different services and these two services do not fall under the purview of composite supply or mixed supply under CGST Act, 2017. 6.2 Having duly considered the arguments put forth by the applicant, we are satisfied that both the services are independent of each other. The price charged by the supplier for both the services are separately mentioned in the contract held in this regard. The bills/invoices are also separately raised in this regard. Moreover, none of the services can be considered as predominant over the other service. Both the services are important for the service recipient and accordingly invited tender and held contract for availing both the services. These services in any way cannot be considered as naturally bundled services as order of both the services can be awarded to separate service providers. Also they are not supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply nor are these services supplied made in conjunction with each other for a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne. (iii) The Transportation Handling Charges are to be reviewed by WBPDCL in the 5th year of the Contract Period based on the progress of the extension of the Railway Siding to the Mines. The Transportation Handling Charges are to be reviewed by WBPDCL based on the revised distance of the extended Railway Siding from the mine. (iv) The prolusions relating to Mining Charges and Transportation Charges as contained in Article 27 of CMA shall apply mutatis mutandis subject however to deduction of 8% markup on the Gross Value. (v) The applicant shall within the 2nd day of each month (or, if such day is not a Business Day, the immediately following Business Day), submit to PCMPL, Tax Invoice in the agreed form along with the documents as required under Article 28 of CMA (the Invoice for the charges payable under this Agreement. (vi) PCMPL shall, on receipt of the Invoice, from the applicant, submit the Invoices to WBPDCL. In accordance with the provisions of the applicable law (including the Central Goods and Services Tax Act, 2017 and/or the State Goods and Services Tax Act, 2017), the invoices shall be in the format acceptable to WBPDCL and will include taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate clause of agreements/work orders of the applicant with transporters and with PCMPL read with invoices/bills issued in this regard that there is value addition in the service of transportation at every stage. Moreover, the applicant is not acting like an agent as defined under Section 2(5) of the GST Act 2017 nor a partner of PCMPL as is evident from para 32.1 of the agreement with PCMPL which clearly states that,- (i) No provision of this Agreement shall be deemed to constitute a partnership or joint venture between the Parties. (ii) No provision of this Agreement shall constitute either party as the legal representative or agent of the other, nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of, or on behalf of the other Party. 7.7 Further, the said agreement dated 12.12.2018 made it clear that PCMPL and the applicant (BGR) are separate companies duly incorporated and registered under the Companies Act 2013. Thus the entire business between the applicant and PCMPL has been held on principal to principal basis for an agreed consideration as defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8.2 We find in this regard that when a person who provides service in relation to transport of goods by road and the lien on the goods has been transferred and the transporter of the goods becomes responsible for the transportation of the goods till safe delivery to the consignee, he essentially undertakes the responsibility cast upon a goods transport agency and the consignee or consignor of the goods, whom the services are provided, gets certain rights which can be exercised against the transporter in respect of transportation of the goods. In such a situation, ideally the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is attributable to the transporter the applicant shall terminate the agreement without any notice and the retention money along with any accumulated dues would be forfeited by the applicant. The transporter shall not have any claim absolutely on the amounts forfeited. (vi) The applicant shall decide the loss of time and expenditure involved impacting the smooth functioning of the project. Loss incurred due to such incidents will be recovered in running bills by the applicant proportionately from all the transporters. The basis and the recovery amounts decided by the applicant is final and binding. The recoveries so deducted may vary month on month depending upon the level of non-compliance. 8.3 The applicant also submitted sample loading slip gate pass both dated 11.10.2020 which contain the details including Serial Number, Work Order Number, Vehicle Number, Transporter Name, Owner Name, License Number, Mobile Number of the Driver, Tare Weight, Gross Weight, Net Weight, Coal Stock Yard In Time Out Time, Date and E Challan Number. Further, the applicant submitted sample Transport Challan under Form - D required to be issued under Mines Minerals (Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the consignee or consignor of the goods, whom the services are provided, gets certain rights which can be exercised against the transporter in respect of transportation of the goods including recovery of monetary value of loss of time expenses. 8.6 We find that in this case it can be treated that the applicant has made an arrangement in place of consignment note by issuing different forms in their own style which they handover to the transporters and after delivery of the goods, weighment challans have been issued at railway siding which proves that goods have been delivered safely. After verification of the quantity, the payment is released to the transporters in due course as per the clauses of agreement mentioned supra. 8.7 We also find that these forms maintained by the applicant contain the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, etc. Thus, we observe that the said Forms are consignment note in terms of Explanation to the Rule 4B of the erstwhile Service Tax Rules 1994. Further the transporter is liable for safe delivery of goods to the destination as widely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Charge Mechanism' (in short RCM) and the applicant is liable to pay GST on the same under RCM after appropriate valuation of the service. 8.11 Further, GST applicable in this case has been covered under Entry 9(iii) of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 (Heading 9965), as amended, subject to conditions mentioned therein, i.e., a GST Rate of 5% (CGST 2.5% + SGST 2.5%) will be applicable provided that credit of input tax credit charged on goods and services used in supplying the services has not been taken. However, Entry No. 9(iii) of the said Notification has been substituted vide Notification No. 20/2017-CT (Rate) dated 22.08.2017 for including an alternative GST Rate of 12% (CGST 6% + SGST 6%), provided that the transporters opted to pay so. The relevant entry has been reproduced below for ready reference. Sr.No. Chapter, section or heading Description of service Rate (per cent) Condition 9 Heading 9965 (Goods Transport Services) (iii) Services of Goods Transport Agency ('GTA') in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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