Determining GST Rate for Transportation of Goods: Composite Supply Ruling

The case involved determining the GST rate applicable for transportation of goods using the supplier's vehicle and the classification of the transport service provided. The Authority ruled that the supply of food products and transportation constitutes a composite supply, with the principal supply being the food product. The applicable GST rate for the composite supply is 2.5% CGST and 2.5% SGST. The transportation service was not classified as a Goods Transport Agency service, and the Authority did not specify how invoices should be raised for the composite supply.

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Issues Involved:
1. Rate of GST applicable for transportation of goods using the vehicle owned by the supplier.
2. Classification of transport service provided by the applicant.
3. GST applicability on supply of goods and transportation charge to an unregistered person.
4. Classification of transaction as composite supply under section 8 of the CGST Act when goods and transport charges are invoiced separately.

Issue-wise Detailed Analysis:

1. Rate of GST applicable for transportation of goods using the vehicle owned by the supplier:
The applicant is engaged in the manufacture and supply of Complementary Weaning Food containing Amylase Activity to the Department of Integrated Child Development Services (ICDS), Government of Tamil Nadu. They sought clarification on the rate of GST applicable for transport charges received for transportation of these food items through vehicles owned by them. The bid document and agreements indicate that the unit price per metric ton (MT) includes transportation charges. Despite raising separate invoices for goods and transportation, the Authority ruled that this constitutes a composite supply, where the principal supply is the food product. Therefore, the applicable GST rate is 2.5% CGST and 2.5% SGST, subject to the conditions of Notification No. 39/2017-Central Tax (Rate) and the equivalent TN GST Notification.

2. Classification of transport service provided by the applicant:
The Authority examined whether the transport service provided by the applicant falls under the Goods Transport Agency (GTA) service. The definition of GTA includes the issuance of a consignment note, which the applicant does not issue. Furthermore, since the transportation is an integral part of the composite supply of food products, it is not classified separately as a GTA service. Thus, the transportation service provided by the applicant is not considered a GTA service.

3. GST applicability on supply of goods and transportation charge to an unregistered person:
The applicant queried whether GST is applicable when supplying goods and transportation services to an unregistered person. The Authority clarified that since the supply of goods and transportation is a composite supply, the entire transaction is subject to GST at the rate applicable to the principal supply, which is the food product. Therefore, the GST rate of 2.5% CGST and 2.5% SGST applies to the entire composite supply, regardless of whether the recipient is registered or unregistered.

4. Classification of transaction as composite supply under section 8 of the CGST Act when goods and transport charges are invoiced separately:
The applicant raised a query on whether the transaction falls under the category of composite supply if invoices for goods and transport charges are raised separately. The Authority ruled that the supply of Complementary Weaning Food containing Amylase Activity, including its delivery to specified centers, is a composite supply as per section 2(30) of the CGST/TNGST Act 2017. The principal supply is the food product, and the transportation is naturally bundled with it. Therefore, the entire transaction is treated as a composite supply, and the applicable GST rate is that of the principal supply. The Authority also noted that it cannot specify how invoices should be raised, as it is for the applicant and the recipient to determine based on their contractual agreement.

Ruling:
1. The supply of Complementary Weaning Food containing Amylase Activity at specified destinations is a composite supply, liable to GST.
2. The applicable GST rate is 2.5% CGST and 2.5% SGST, subject to the conditions of relevant notifications.
3. The transportation service alone is not classified as a Goods Transport Agency service.
4. The Authority does not specify how invoices should be raised for the composite supply.

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