2020 (6) TMI 520 - AAR - GST

Unregistered road transport providers fall under GTA definition, recipients must pay GST under reverse charge mechanism section 9(3)

AAR Uttarakhand ruled that unregistered persons providing road transport services fall under Goods Transport Agency (GTA) definition for reverse charge ... Reverse charge mechanism - goods transport agency (GTA) - consignment note - supply of services by unregistered supplier to a registered recipient - liability to pay tax by recipient under RCMGoods transport agency (GTA) - reverse charge mechanism - supply of services by unregistered supplier to a registered recipient - Services received from unregistered road transporters by the applicant fall within the definition of GTA services and are exigible to tax under the reverse charge mechanism. - HELD THAT: - The Authority examined Notifications relating to RCM and the definition of 'goods transport agency' in the rate Notification. The services of transporting goods by road provided to the applicant correspond to services rendered by a GTA as notified under the RCM provision. Section 9(3) and 9(4) of the Act and Notification No. 13/2017-Central Tax (Rate) identify GTA services as a category on which tax is payable by the recipient under RCM. Given that the transporters performed transportation of goods by road for the applicant and no consignment notes were issued by the transporters, the consequence under the statutory scheme is that the recipient (the applicant) is liable to discharge tax under the reverse charge mechanism in respect of such supplies from unregistered transporters. [Paras 7]The services procured from unregistered transporters constitute GTA services and are taxable under RCM; the applicant is liable to pay GST as recipient under RCM.Consignment note - reverse charge mechanism - evidentiary effect of transport documentation - Form 2.1 issued by the applicant constitutes a consignment note for the purposes of the GTA definition and RCM. - HELD THAT: - Although 'consignment note' is not defined in the Act, the Authority relied on the Explanation to Rule 4B of the Service Tax Rules (1994) for guidance as to the character of a consignment note. Form 2.1, prepared and signed by the applicant, contains particulars conventionally found in a consignment note (consignor and consignee, vehicle registration, details of goods, etc.), is handed over to the transporter at the time of taking charge of goods, and on delivery the transporter receives Form 3.3 from the depot as proof of delivery. The form effectually transfers the lien and responsibility for safe delivery to the transporter in the same manner as a conventional consignment note. The Authority further observed that requiring a consignment note to be issued only by the transporter would enable avoidance; treating the Form 2.1 as a consignment note prevents such evasion and fulfils the condition in the GTA definition. [Paras 7]Form 2.1 is to be treated as a consignment note; accordingly the condition in the GTA definition is satisfied and RCM applies.Final Conclusion: The Authority ruled that (i) services received from unregistered road transporters by the applicant fall within the definition of GTA and are taxable under the reverse charge mechanism, and (ii) the applicant's Form 2.1 qualifies as a consignment note for these purposes, rendering the applicant liable to pay GST under RCM. Issues Involved:1. Whether a person, unregistered with GST, providing road transport services by his own truck qualifies as GTA for RCM under GST.2. Whether issuance of E-way bill, Form 2.1 & 3.3 by or to an unregistered road transporter providing road transport services by his own truck is treated as a consignment note for GST-RCM purposes.3. Whether a person, unregistered with GST, providing road transport services by hiring trucks from third parties, qualifies as GTA for RCM under GST.4. Whether issuance of E-way bill, Form 2.1 & 3.3 by or to an unregistered road transporter providing road transport services by hiring trucks from third parties is treated as a consignment note for GST-RCM purposes.Detailed Analysis:1. Unregistered Person Providing Road Transport Services by Own Truck:The applicant sought clarification on whether a person unregistered with GST, providing road transport services using their own truck, falls under the definition of Goods Transport Agency (GTA) and is subject to Reverse Charge Mechanism (RCM). The ruling clarified that services provided by GTA, as defined in Notification No. 11/2017-Central Tax (Rate), include any person providing transport services and issuing a consignment note. The applicant's practice of issuing Form 2.1, which includes details like material, vehicle number, and driver information, was considered equivalent to a consignment note. Therefore, such services fall under the definition of GTA and are subject to RCM under Notification No. 13/2017-Central Tax (Rate).2. Issuance of E-way Bill, Form 2.1 & 3.3 by/to Unregistered Transporter:The applicant queried if the issuance of E-way bill, Form 2.1, and Form 3.3 by or to an unregistered road transporter is treated as a consignment note for GST-RCM purposes. The ruling found that the applicant's Form 2.1, which contains necessary details for transporting goods, serves the purpose of a consignment note as per the explanation to Rule 4B of the Service Tax Rules, 1994. This form, combined with Form 3.3, which confirms delivery, fulfills the requirement of a consignment note, thereby satisfying the conditions for GTA services under RCM.3. Unregistered Person Hiring Trucks from Third Parties:The applicant also sought clarification on whether a person unregistered with GST, who provides road transport services by hiring trucks from third parties, qualifies as GTA for RCM purposes. The ruling applied the same principles as in the first issue. Since the applicant issues Form 2.1 and the transporter is responsible for the safe delivery of goods, the service qualifies as GTA under the same notifications and is subject to RCM.4. Issuance of E-way Bill, Form 2.1 & 3.3 by/to Unregistered Transporter Hiring Trucks:The final query was whether the issuance of E-way bill, Form 2.1, and Form 3.3 by or to an unregistered transporter hiring trucks from third parties is treated as a consignment note for GST-RCM purposes. The ruling reiterated that Form 2.1, which includes all necessary details and is used in conjunction with Form 3.3, qualifies as a consignment note. This ensures that the services provided by such transporters fall under the definition of GTA and are subject to RCM.Conclusion:The ruling concluded that services received from unregistered transporters by the applicant fall under the definition of GTA services as per Notification No. 11/2017-Central Tax (Rate) and are covered under RCM as per Notification No. 13/2017-Central Tax (Rate). Form 2.1 issued by the applicant can be considered a consignment note, fulfilling the necessary conditions for GTA services under GST.