The Authority for Advance Rulings (AAR), Gujarat has held that input tax credit (ITC) can be claimed by the assessee on provision of the GTA services provided despite refrigerated vehicles travelling empty during the return journey.
The applicant, M/s. Vadilal Enterprises Ltd, supplies ice cream in various States in addition to the supplies in Gujarat State. For transporting the goods to places located in different States, Vadilal has been availing facility of refrigerated vehicles because the goods have to be stored and preserved at a particular temperature for avoiding deterioration in quality, for which such refrigerated vehicles are essentiality.
Various independent agencies, which are owners of refrigerated vehicles, have been providing refrigerated vehicles to Vadilal for transportation of its goods. After delivering the goods at the destination, the refrigerated vehicle comes back. During the return journey, ordinarily, the vehicle travels empty. The plastic trays in which Vadila transported and delivered the goods at the destination, on the other hand, may be lying empty at the location. Therefore, empty plastic trays may be brought back in the refrigerated vehicle during its return journey. It was submitted that for this purpose, other independent transporters would be employed and appropriate transportation charges (i.e. freight) would be paid to them, and applicable GST liability on such transportation charges would also be discharged.
With regard to the Tax liability, Mr. Atul Mehta (State Member) and Mr. Arun Richards (Central Member) has observed that the GST liability for supply of service by a GTA in respect of transportation of goods by road to a registered person shall be paid by the recipient of such services. We find M/s Vadilal liable to GST under RCM for the GTA service supplied to it.
Regarding the claim of input tax credit, the AAR bench observed that “ITC is admissible to Vadilal, on GST paid on GTA service supplied to it, despite the fact that refrigerated vehicles travelled empty during the return journey as Vadilal has paid an agreed freight to the GTA for its service and this agreed freight was inclusive of both onward and return journey (round trip).”
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