Transportation charges in works contract subject to GST as ruled by authority under Section 2(119)

The authority ruled that transportation charges received by the applicant are liable to GST as part of a works contract under Section 2(119) of the GST Act. The ruling emphasized that the entire contract, including civil works and installation of solar power plants, constitutes a composite supply classified as a works contract involving immovable property, thus subject to GST. Individual components cannot be treated separately for tax purposes.

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Issues Involved:
1. Classification and taxability of standalone transportation contracts.
2. Classification and taxability of composite supply involving transportation and insurance.
3. Classification and taxability of composite supply involving loading, transportation, unloading, and in-transit insurance.
4. Classification and taxability of supply of services under Service Contract (Split Contract).
5. Classification and taxability of supply of services under EPC Contract.

Issue-Wise Detailed Analysis:

1. Classification and Taxability of Standalone Transportation Contracts:
The applicant sought clarification on whether standalone transportation contracts fall under Service code 9965 and if they are exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). The authority observed that the applicant is not a Goods Transport Agent (GTA) since no consignment note is issued, and thus, the standalone transportation service is exempt from GST.

2. Classification and Taxability of Composite Supply Involving Transportation and Insurance:
The applicant inquired whether the composite supply of transportation and insurance is classified under Service code 9965 and exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). The authority noted that if the transportation service is not provided by a GTA and no consignment note is issued, the composite supply involving transportation and insurance would be exempt from GST.

3. Classification and Taxability of Composite Supply Involving Loading, Transportation, Unloading, and In-Transit Insurance:
The applicant asked if the composite supply of loading, transportation, unloading, and in-transit insurance merits classification under Service code 9965 and is exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). The ruling clarified that such composite supply, if not provided by a GTA, would be exempt from GST, provided no consignment note is issued.

4. Classification and Taxability of Supply of Services Under Service Contract (Split Contract):
The applicant sought clarification on whether the supply of services under a Service Contract, including loading, transportation, unloading, and in-transit insurance, merits classification under Service code 9965 and is exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). The authority noted that the contract should be considered as a whole, and if the service is not provided by a GTA and no consignment note is issued, it would be exempt from GST.

5. Classification and Taxability of Supply of Services Under EPC Contract:
The applicant questioned whether the supply of services under an EPC Contract, including loading, transportation, unloading, and in-transit insurance, merits classification under Service code 9965 and is exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). The authority concluded that the EPC contract constitutes a composite supply in the nature of a works contract as defined under Section 2(119) of the GST Act. The contract involves civil works and the installation of solar power plants, which are considered immovable property. Therefore, the transportation charges received are liable to GST as part of the works contract.

Conclusion:
The authority ruled that the transportation charges received by the applicant are liable to GST as a works contract under Section 2(119) of the GST Act, given that the EPC contract involves the creation of immovable property. The ruling emphasized that the entire contract must be considered to determine the nature of the supply, and individual components cannot be isolated for separate tax treatment.

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