Goods Transport Agency, Goods and Services Tax - GST

[Shubham Kankaria]

Hello

If a transporter says he is not not responisble for safe delivery of goods then can he be said as GTA in GST ?

Posts / Replies

[KASTURI SETHI]

As per definition of GTA (including consignment note), GTA is responsible for safe delivery to the consignee.

Relevant extract of Board's Flyer No. 38 dated 1.1.18

Position under GST

“goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

❖ A consignment note is a document issued by a GTA against the receipt of goods for the purpose of transporting the goods by road in a goods carriage. Where a consignment note is issued, it implies that the lien on the goods has been transferred and the transporter of the goods becomes responsible for the goods till it’s safe delivery to the consignee.

[PAWAN KUMAR]

Dear sir,

The reply of Shri Kasturi sir is correct. If any person provides services in relation to transportation of goods by road and issue consignment notes by whatever names called, he will be the GTA and issue of consignment notes cast responsibility on transporter to safer delivery till the customer's end/doorstep.

[Shubham Kankaria]

So sir I want to know if "Consignment Note" word is written in document but the agreement says that trasporter is not responsible for safe delivery of goods then will that transporter will be GTA under GST ?

[KASTURI SETHI]

No agreement can be executed in violation of CGST Act. GTA cannot avoid its responsiblity by way of such agreement which is contrary to the letter and spirit of GST law. Law will prevail over this agreement. Consignment Note legally binds GTA to own responsibility for safe delivery till destination of the consignee. So this agreement has no legal value in eyes of GST law.

[Shubham Kankaria]

Sir so when words " Consignment Note" is written but the agreement says transporter donY have any responsibility for safe delivery of goods then also transporter is GTA and when words "Consignment Note" is not writtten but stil the agreement says transporter is responsible for safe delivery of goods transporter is GTA?

[KASTURI SETHI]

Even if GTA does not issue consignment note or does not mention the words, that registered person is GTA. Non-issuance of consignment note cannot be adopted as modus operandi for evasion of duty/tax or for avoiding any responsibility as you have mentioned.The legal status of GTA remains the same whether it pertains to pre-GST era or post-GST era. If Goods Transport Service by road has been provided, that person (GTA) has to pay tax and own responsibility for safe delivery. Here we are concerned GST Act and not Contract Act/Evidence Act. GST Act shall override Contract Act.

In support of my view, I am posting the case law. Here is the judgement of Hon'ble Supreme Court

Goods Transport Agency service - Co-operative Sugar Mills receiving services of individual truck owners for transportation of sugarcane from Cane Collection Centers to their sugar factory, liable to pay Service Tax though such truck owners issued bill and not consignment note for transportation charges

The Supreme Court Bench comprising Hon’ble Mr. Justice S.A. Bobde and Hon’ble Mr. Justice Deepak Gupta on 4-1-2019 after condoning the delay dismissed the Special Leave Petition (Civil) Diary No. 27143 of 2018 filed by Kisan Sahkari Chini Mills Ltd. against the Judgment and Order dated 7-3-2017 of Allahabad High Court Bench at Lucknow in Central Excise Appeal No. 23 of 2014 as reported in 2019 (29) G.S.T.L. 292 (All.) = 2017 (3) TMI 1786 - ALLAHABAD HIGH COURT (Commissioner v. Kisan Sahkari Chini Mills Ltd.). While dismissing the petition, the Supreme Court passed the following order :

“Delay condoned.

The special leave petition is dismissed.

As a sequel to the above, pending interlocutory applications, if any, stand disposed of.”

The Allahabad High Court in its impugned order had held that even though the individual truck owners had issued only bills for transportation charges and not consignment note, the Co-operative Sugar Factory was still liable to pay Service Tax as recipient of the Goods Transportation Agency’s services provided by such individual truck owners for transportation of sugarcane from Collection Centers to their sugar factory.

[Kisan Sahkari Chini Mills Ltd. v. Commissioner - 2019 (29) G.S.T.L. J71 (S.C.)] = 2019 (1) TMI 1679 - SC ORDER

[Shubham Kankaria]

Sir in that flyer..its written Individuak truck owners dont need to issue Consignment note ..so what does that mean?

[KASTURI SETHI]

The Board's circular has no statutory force. The order of Supreme Court is the law of land. Flyer is just clarificatory and for making things understand. We are to follow the Act and Rules.

[Shubham Kankaria]

Ok sir.

So now the question is when are the services of transportation of goods by road exempt in GTA ?

[KASTURI SETHI]

1. Extract of Board's Article dated 1.8.19

9.4.10 Exemption :

9.4.10.1 Supply from GTA to unregistered persons has been exempted from tax.

2. GTA services specifically exempt

In terms of notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 (sr. no. 21), the following services provided by a GTA (Heading 9965 or 9967) is exempt from payment of tax :

Services provided by a goods transport agency, by way of transport in a goods carriage of -

(a) agricultural produce;

(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;

(d) milk, salt and food grain including flour, pulses and rice;

(e) organic manure;

(f) newspaper or magazines registered with the Registrar of Newspapers;

(g) relief materials meant for victims of natural or manmade disasters, calamities, accidents or mishap; or

(h) defense or military equipments.

Similarly, the following services received by the GTA (Heading 9966 or 9973) is also exempt in terms of notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 (sr. no. 22)

Services by way of giving on hire -

………………..

(b) to a goods transport agency, a means of transportation of goods.

Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.

3. Threshold exemption

4. If tax is paid by consignee or consignor under RCM, GTA is to be treated as exempted.

[Shubham Kankaria]

Does it means any transportation of goods by road will be either through GTA or Courier Agency?

I mean to ask in what situation. Does tranportation if goods by road not through GTA or Courier Agency ?

[KASTURI SETHI]

You need to through the definition of GTA deeply.

[Shubham Kankaria]

Sir can u please let me know that exactly as I am unable to to get to know what it means.

[Shubham Kankaria]

Sir I will be very grateful if u can please help me in this.

[KASTURI SETHI]

Q. Does it mean any transportation of goods by road will be either through GTA or Courier Agency ?

A. NO. There are exemptions available. If any person transports his goods by his (own) truck or scooter or car or non-motorised vehicle (hand driven), such service is self service and will not get the status of GTA. Self service is not supply.Supply of service is by one person to another person for consideration.

[Shubham Kankaria]

Sir I am not aksing of self service. I am asking if tranportation of good by road is done then in what case it will not be through GTA? Apart from self service.

[KASTURI SETHI]

Because of various exemptions available already given in detail above. Read again word for word.

[Shubham Kankaria]

Means every transportation of goods by road will be thorugh GTA only?

[KASTURI SETHI]

You can call me at 11.00 a.m. sharp.

[Shubham Kankaria]

Ok sir