The Maharashtra Authority of Advance Ruling (AAR) in its recent order on the application filed by M/s Liberty Translines has ruled that the service rendered by a sub-contractor by giving only vehicles to the main contractor viz GTA would not be classified as Goods Transport Agency (GTA) service when the service rendered by the main contractor, is already classified as GTA service (SAC 996791) and is going to remain unchanged.
It was also adjudged in said order that as the sub-contractor cannot be treated as a GTA, such sub-contractor cannot charge GST @ 12% under forward charge mechanism as a GTA.
Facts of the case
- The Applicant, M/s Liberty Translines is the owner of various goods transport vehicles, is in the business of Road Transportation, and registered as Goods Transport Agency (GTA) under GST Laws. The service rendered by the applicant is classified under SAC 996791 which is covered under reverse charge.
- Applicant, at present, issues consignment notes during the execution of the service of transportation of goods and has opted for 5% GST payable by the recipient under reverse charge, as per Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 as amended. Hence Applicant does not charge GST to its clients and also does not claim any input tax credit (ITC) on goods or services used in supplying the service.
- Applicant now want to opt for payment of GST @12%, on forward charge basis and and avail ITC as permitted by Notification No. 20/2017-CT (Rate) dated 22.08.2017. In particular there is a company named POSCO ISDC Pvt. Ltd which provides GTA service and has opted for GST payable on forward charge basis @ 12%, by claiming related ITC. Since POSCO does not have enough fleet of its own, it sub-contracts GTA service to the applicant who provide service as a sub-contractor.
Question of which Ruling was sought
Whether the service rendered by the Applicant to POSCO ISDC Pvt. Ltd. as a sub-contractor would be classified as GTA service (SAC 996791) when the Service rendered by POSCO ISDC Pvt. Ltd. as the main contractor, is already classified as GTA service (SAC 996791) and is going to remain unchanged.
Whether the applicant would be right in charging GST @ 12% under forward charge to POSCO ICDS Ltd in terms of Notification No. 20/2017-CT (Rate) dated 22.08.2017 when POSCO ISDC Ltd as the main contractor is already charging GST @ 12% under the same Notification.
Highlights and Ruling of order of Maharashtra AAR Order
- The role of the applicant is to just provide their vehicles to POSCO as and when called for and to this extent we are of the opinion that the applicant is giving only vehicles to POSCO and thus it is POSCO which has the transportation contract with the consignor / consignee. Thus we find that the transaction in this case would be one of hiring of vehicles and not that of Good Transport Operator.
- It does not appear that there is an intention by the consignor / consignee to award the transportation contract to the applicant.
- A perusal of the GST Laws also do not reveal that there can be more than one consignment note in one particular note.
- Consignment note is an essential condition to be considered as GTA. For a single transaction and the same movement of goods, there cannot be multiple consignment notes. Hence there will be one consignment note for movement of goods to a place to be issued by POSCO.
- Applicant in respect of subject transaction cannot be treated as a GTA and therefore cannot charge GST @ 12% under forward charge mechanism as a GTA.
Based upon above the Authority consisting of members A.A. Chahure and P. Vinitha Sekhar ruled that the service rendered by the Applicant to POSCO ISDC Pvt. Ltd. as a sub-contractor would not be classified as GTA service when the service rendered by POSCO ISDC Pvt. Ltd. as the main contractor, is already classified as GTA service (SAC 996791) and is going to remain unchanged.
Further it was also adjudged that the Applicant cannot charge GST @12% under forward charge mechanism to POSCO, in terms of Notification No. 20/2017-CT (Rate) dated 22.08.2017.
For ready reference of our readers the order of Maharashtra AAR can be read from below:
Further for future reading and reference the order can be also be downloaded from below:
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