Our Queries in GST

[SOPL SOPL]

Dear Sir/Madam,

Good Morning !!

Our queries in GTA (Goods Transport Agency) explained below:

we are providing goods transportation services to ONGC on daily basis for a contract of 2 months.Here, we hired vehicles from third party (i.,e our suppliers) and same was given to rental to ONGC.

The invoice raised by us to ONGC was under GTA and GST was paid under RCM @ 5% (i.e, GST will be paid by our client -ONGC). Because of this we are not availing any input/input services for this inward supply..,

Queries;

1. we are providing transportation of goods services by way of consignment note in which one of the condition is 'Carrier not responsible for leakage & breakage' .But, consignment note indicates that lien on goods has been transferred to transporter and he is responsible for goods till its safe delivery to consignee. So, our consignment note is contrary to actual definition..
Due to this , our consignment note is legally valid for GTA applicability ??

2. Did we come under GTA, because we are not carrying any agency functions.
As per my understanding, GTA means all individual truck owners will form one association and run their business in single office such as lorry transport office / lorry association /union etcc.., and also Transport offices like SRMT,Navata , kesineni cargo etc.., they will issue consignment note by considering condition that any goods damaged or loss will be compensated as per value declared.So, they may called as GTA and also act as courier agents also.

So, here by Query is we are not forming any union or association. Therefore, we are not carrying agency functions.

Agency meaning as per dictionary

The agency is the agreement in which one party entrusts another party to conduct business on their behalf. The agency agreement comes in the following forms:

Express agreement (both oral and written)

Implication

Conduct of the principal.

By referring the above definition, we are not coming under agency .

By considering the above definition of agency and consignment note, It seems that we will not be under GTA services, then our outward services will be exempt under GST act.

pls advice on my view and correct me, if iam wrong...

[KASTURI SETHI]

Reply to query no.1 : There are so many factors to qualify as GTA. Proper consignment note is one of the parameters. If you write the words, "carrier not responsible for leakage & breakage" on the consignment note it will be improper consignment note.

Just for your knowledge sake : One cannot avoid tax or avail exemption from payment of GST only on the basis of non-issuance of consignment note. "Non-issuance of consignment note does not mean exemption----held by AAAR-GST Rajasthan reported as Applicant K.M.Trans Logistics (P) Ltd. - APPELLATE AUTHORITY FOR ADVANCE RULING RAJASTHAN

Reply to query no.2 : "Truck Operators Union is not a commercial concern and hence not covered under GTA-----held by CESTAT Chandigarh in the case of CCE, Rohtak Vs. Harayana Co-operative Sugar Mills - 2017 (4) TMI 283 - CESTAT CHANDIGARH reported as (Tri.Chandigarh. Decided on 28.3.17. This case law pertains to Service Tax and not GST but definition of GTA in GST is same as it existed before GST.

Pl. peruse above decisions and you will get reply to your queries.

[Shilpi Jain]

The person hiring the vehicles to you can be considered as vehicle hired to GTA which is exempt from gst.

So u consider yourself as GTA as you are issuing consignment note. The format of note or any other conditions not specified in the law..

[KASTURI SETHI]

Agreed with Madam Shilpi Jain. I add that Issuance of improper consignment note by GTA will not disqualify the assessee as GTA. No 'relaxation' to GTA/assessee in any form.

[SOPL SOPL]

Consignment note not defined in Gst Act.

In service tax , it is said that when consignment note is issued transporter is liable for safe delivery od goods.

For goods transport , transporter usually issues some document - say LR.

Department saying that any document used for transport of goods is a consignment note irrespective of the fact that whether it is agreed between parties or not w.r.t. transporter liability for safe delivery of goods.Department assumes transporter is alible in all cases.

Transport of goods by road is exempt except in case of GTA and courier agency.

As per Gst law , every transporter has to maintain some records like records of goods transported, delivered and goods stored in transit by him alongwith the Goods and Services Tax Identification Number of the registered consigner and consignee for each of his branches.

On combined reading of above it is understood that department retains right either to exempt transport service or not on case to case basis.Nothing more than that.

Bad thing here is, confusion is still prevailing in one of the major service sector - transport service , even after 4 years 6 months.

Further mentioning transporter document number in part B of E-way bill is not mandatory.(In practice)

[KASTURI SETHI]

Dear Sir,

In case you are still of the view that confusion persists in GTA service/transportation service, make a representation to the GST Council with your suggestions in the interest of Trade and Industry.

[CA Hemanth Kumar]

Dear Sir,

From the facts, im of the view that services provide are in the nature of renting of motor vehicles for a period of 2 months and not a GTA services. However, by issuing consignment note you are creating a conflict with the nature of service provided.

[Shilpi Jain]

The department does not have any right to decide which would be taxable and not. That right comes to them from the legislature. So, let the documentation be proper in place with the person giving on hire to issue only a periodical invoice so that the arguments of the department can be defended.

AI Summary

Goods Transport Agency status depends on consignment note form and contractual allocation of carriage liability for GST applicability. Qualification as a Goods Transport Agency under GST depends on the contractual allocation of carriage liability, issuance and form of the consignment note, and whether the underlying supply is renting of motor vehicles or carriage of goods. An improper or non standard consignment note does not by itself exempt the supplier from GTA classification; authorities and departmental practice treat transport documents broadly as consignment notes and consider records, invoicing and liability allocation when determining GST applicability and reverse charge exposure.