2025 (5) TMI 1885 - AAR - GST

Taxable supply or not - goods carriage given on lease to Goods transportation Agency (GTA) - exempted/Nil rated supply or not - service provider has to be a Goods Transportation Agency (GTA) to avail the above mentioned exemption or it can be any other person. HELD THAT - The applicant being an individual and intend to own a goods carriage is going to supply the vehicle to a Goods Transport Agency. As a proof the applicant has furnished copy of the registration certificate of M/s. Cecius Logistics Solutions Private Limited whose GSTIN 27AAICC8038K179 and sample copies of consignment note issued by M/s. Cecius Logistics Solutions Private Limited as a proof that they are also a Goods Transport Agency . SI. No. 22 of the said notification is specific to Chapter heading 9966 and 9973. Chapter heading 9966 relates to Rental services of transport vehicles with operators and Chapter heading 9973 is for Leasing or rental services without operator . The applicant during the personal hearing have informed that he is only supplying the goods carriage vehicle (Reefer vehicles) without the driver - the period of contract or agreement entered into by the applicant with M/s. Celcius Logistics Solutions Private Limited for supply of goods carriage vehicle can only be a Lease/Rental . Hence the classification would rightly be under 9973 as Leasing or rental services without operator . CBIC vide Circular No. 164/20/2021-GST (CBIC-190354/207/2021-TU(TRU-II)-CBEC) dated 6th October 2021 while clarifying applicability of GST on Renting of Vehicles to State Transport Undertakings and Local Authorities have clarified that giving on hire in SI. No. 22 of Notification No. 12/2017-CT(Rate) includes renting of vehicles and accordingly the services where vehicles rented or given on hire to State Transport Undertakings and Local Authorities are eligible for exemption. Therefore the term giving on hire specified in the notification includes leasing and rental services also. In the instant case the service rendered is providing vehicle on hire . the service provider is the applicant M/s. Dharmaraju Ragul who is providing the goods carriage vehicle on hire for a consideration and the Service receiver is M/s. Celcius Logistics Solutions Private Limited who necessarily must be a goods transport agency. No condition is specified for claiming the facility provided in the notification for the service provider who is giving the goods carriage on hire. Conclusion - i) The supply of goods carriage on hire or lease to a Goods Transport Agency is a taxable supply. By virtue of SI. No.22 of Notification No. 12/2017-CT (Rate) dated 28-06-2017 the activity is charged to Nil rate of tax. ii) Column 5 of the Table in the Notification is for conditions applicable for that specific entry. At SI. No. 22 of the said Notification no condition is specified for claiming the facility provided under the notification. iii) The service provider namely the applicant need not be a goods transport agency to claim the facility of the Notification.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Authority for Advance Ruling (AAR) are:

(i) Whether the supply of goods carriage given on lease or hire to a Goods Transportation Agency (GTA) constitutes a taxable supply under GST law?

(ii) If such supply is exempted or nil-rated, what conditions, if any, must be satisfied to avail the exemption under the relevant GST Notification?

(iii) Whether the service provider must be a Goods Transportation Agency to avail the exemption, or can any other person providing goods carriage on hire claim the exemption?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Taxability of goods carriage given on lease to a Goods Transportation Agency

Relevant legal framework and precedents: The key legal provisions considered are Notification No. 12/2017-CT (Rate) dated 28-06-2017, specifically SI. No. 22 relating to exemption of services by way of hire of vehicles to GTAs, and the CGST Act, 2017 provisions on taxable supplies. Circular No. 164/20/2021-GST dated 6th October 2021 by CBIC was also referred to for clarification on the term "giving on hire."

Court's interpretation and reasoning: The Authority noted that the supply of goods carriage vehicle on lease or hire to a GTA is a service and hence a taxable supply under GST. However, by virtue of SI. No. 22 of the Notification, such services are subject to nil rate of tax, effectively exempting them from GST liability.

Key evidence and findings: The applicant submitted a draft lease agreement with a registered GTA, M/s. Celcius Logistics Solutions Private Limited, along with the GTA's GST registration and sample consignment notes, establishing the bona fide nature of the transaction and the status of the recipient as a GTA.

Application of law to facts: The applicant's activity of leasing a goods carriage vehicle (a 'Reefer Vehicle') to a GTA falls squarely within the scope of the exempted service under SI. No. 22 of the Notification. The Authority classified the service under Heading 9973 (Leasing or rental services without operator) as the vehicle is supplied without a driver and the contract period is five years, which is not a short-term hire.

Treatment of competing arguments: The applicant contended that the term "hire" includes lease and rent, supported by CBIC's Circular. The Authority accepted this interpretation, clarifying that "giving on hire" includes leasing and renting services.

Conclusion: The supply of goods carriage on lease or hire to a GTA is a taxable supply but is subject to nil rate of tax under the Notification, thus exempt from GST.

Issue 2: Conditions to be satisfied for claiming exemption/nil rating under Notification No. 12/2017-CT (Rate)

Relevant legal framework and precedents: Notification No. 12/2017-CT (Rate), SI. No. 22, and CBIC Circular No. 164/20/2021-GST.

Court's interpretation and reasoning: The Authority examined the conditions column of the Notification and found no specific conditions prescribed for the exemption under SI. No. 22. The exemption applies to services by way of giving on hire to a GTA or a State Transport Undertaking without any additional conditions.

Key evidence and findings: The applicant provided evidence confirming the recipient's status as a GTA and the nature of the goods carriage vehicle supplied.

Application of law to facts: Since no conditions are stipulated in the Notification for this entry, the applicant is entitled to claim the exemption without fulfilling any further criteria.

Treatment of competing arguments: There was no dispute on additional conditions; the Authority emphasized the absence of any prescribed conditions for this exemption.

Conclusion: No conditions need to be satisfied beyond the supply being to a GTA and involving a goods carriage vehicle for the exemption to apply.

Issue 3: Whether the service provider must be a Goods Transportation Agency to claim exemption

Relevant legal framework and precedents: Notification No. 12/2017-CT (Rate), SI. No. 22, CBIC Circular 164/20/2021-GST.

Court's interpretation and reasoning: The Authority clarified that the exemption is available to any person providing goods carriage vehicle on hire to a GTA. The service provider need not themselves be a GTA. The key requirement is that the recipient of the service must be a GTA.

Key evidence and findings: The applicant, though unregistered and not a GTA, intends to supply the vehicle to a registered GTA, supported by documentary evidence.

Application of law to facts: The applicant qualifies for exemption as the service receiver is a GTA. The service provider's status as a GTA is immaterial.

Treatment of competing arguments: The applicant sought clarification on this point; the Authority relied on the Notification's language and CBIC Circular to conclude that the exemption is linked to the recipient's status.

Conclusion: The service provider need not be a GTA to claim exemption; any person providing goods carriage on hire to a GTA is eligible.

3. SIGNIFICANT HOLDINGS

The Authority held:

"The supply of goods carriage on hire or lease to a Goods Transport Agency is a taxable supply. By virtue of SI. No.22 of Notification No. 12/2017-CT (Rate) dated 28-06-2017, the activity is charged to Nil rate of tax."

"At SI. No. 22 of the said Notification, no condition is specified for claiming the facility provided under the notification."

"The service provider, namely the applicant need not be a goods transport agency to claim the facility of the Notification."

Core principles established include:

- The term "giving on hire" in the exemption Notification includes leasing and renting of vehicles.

- The exemption under SI. No. 22 applies to services by way of giving goods carriage on hire to a GTA, regardless of the service provider's registration status or classification as a GTA.

- No additional conditions are prescribed under the Notification for claiming the exemption beyond the nature of the supply and the recipient's status as a GTA.

Final determinations on each issue were clearly articulated, providing authoritative guidance on the taxability and exemption of leasing goods carriage vehicles to GTAs under GST law.