Adv GST Rate Too, Hon'ble Finance Minister Ji: Extend the Stage Carriage Principle to Goods Transport Without a Consignment Note.

A Humble Submission to the Hon'ble Chief Minister & Finance Minister, Kerala, and the Hon'ble Minister for Transport

The proposal to permit private stage carriage buses to transport goods is a timely measure to improve the financial viability of the passenger transport sector. While the proposal falls within the domain of transport policy, it also raises an important issue under the GST law which deserves attention at the policy stage itself.

Under the GST regime, transportation of goods by road becomes taxable as a service of a Goods Transport Agency (GTA) only when the transporter issues a consignment note. The consignment note is the defining feature of a GTA because it evidences that the transporter has accepted legal responsibility for the transportation and delivery of the goods. In its absence, the transporter is not a GTA.

This principle is comparable to the distinction that already exists in passenger transport. A stage carriage operating on fixed routes is legally different from a contract carriage or a rent-a-cab service. Likewise, a stage carriage permitted to carry goods should not automatically be regarded as a Goods Transport Agency merely because it transports goods.

A practical difficulty, however, is likely to arise. Bus operators or their authorised agents may issue tickets, booking slips, luggage receipts or freight receipts for collecting transport charges. Such documents are intended only to acknowledge payment and regulate carriage. They should not, merely by reason of their issuance, be construed as consignment notes. Otherwise, operators may inadvertently be brought within the GTA framework even though they never intended to function as Goods Transport Agencies.

The distinction is vital because thousands of small transport operators merely provide transportation without assuming the statutory obligations associated with a Goods Transport Agency. Subjecting them to GTA provisions solely because they issue a receipt for freight would defeat the very object of the law and generate avoidable disputes.

The recent rationalisation of GST rates for GTA services is a welcome reform. Yet, certainty is as important as tax rates. A simple clarification at the appropriate stage can prevent years of unnecessary litigation.

It is, therefore, respectfully submitted that while granting permission for stage carriage buses to transport goods, the Government of Kerala may simultaneously take up the matter with the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) and recommend issuance of a suitable clarification that:

1. Mere transportation of goods without issuance of a consignment note is not a Goods Transport Agency service.
2. A ticket, luggage receipt, booking slip or freight receipt issued by a stage carriage operator for collection of transport charges shall not, by itself, be treated as a consignment note.
3. Stage carriage operators permitted to transport goods shall not be regarded as Goods Transport Agencies unless they issue consignment notes and undertake the legal responsibilities attached to a GTA.

Such a clarification would preserve the distinction recognised under the GST law, protect small transport operators from unintended tax liability, reduce avoidable litigation, and further the objectives of certainty, simplicity and ease of doing business.

A proactive recommendation by the Government of Kerala to the GST Council and the CBIC at the time of introducing the transport policy would ensure that the intended relief to private stage carriage operators is not diluted by avoidable GST disputes.

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By G. Jayaprakash, Advocate