Transport of goods by road

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my clients is running a Logistics business by transporting goods under the direction of CHA or the customers from the customs port to their factory location. He is running a private limited company. His regular business activity is transporting the goods from one place to another place without entering into any agreement also not issuing any Consignment Note. Further, my client is not charging any tax on the transport charges by assuming he is exempted from GST vide Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 Tariff Heading 9965. Recently, he was audited by the GST department but denied the exemption on the transaction and levied GST @ 18% on the entire turnover along with interest and penalty.

I have a doubt, whether he will fall under notification 12/2017 @ Exempted rate (or) 11/2017 @ 18% tax. Please advise me on this, while searching judgment for tax on transport of goods, there are many advance rulings that upheld the rate of tax @ 18% and they fall under Notification No.11/2017. At the time of personal hearing, the client also stated in their representation no tax is charged and also falls under the exemption category.

Please let me know any supporting case law to get rid of this liability.

Thanks in Advance.

[Amit Agrawal]

I feels that more clarity is required about what is really Dept's case against your client. 

Kindly explain what is the classification of services - as determined by Revenue - to demand GST and also, kindly let us know the basis & documentary evidences relied by them for such classification.

Kindly also explain why Dept. thinks that exemption is not available to your client. 

[MANOJ JAIN]

Hi,

In my humble opinion, it is exempt vide Notification No. 12/2017- Central Tax (Rate), Sl No. 18 heading 9985, which your client is taking benefit of, already.

Regards,

CA Manoj Jain

AI Summary

GST exemption for road transport services contested after department reclassifies freight as taxable supply, assessed with interest and penalty. Whether road transport services by a private logistics company from customs ports to factories are exempt under Notification No.12/2017 or taxable under Notification No.11/2017 is disputed. The supplier operated without written agreements or consignment notes, did not charge GST, and was assessed by revenue at the standard rate with interest and penalty. The key issues are the service character, documentary evidence of arrangements, and the revenue's basis for classifying receipts as taxable supplies versus exempt transport services.