The Authority of Advance Ruling (AAR), Chhattisgarh has ruled that the Goods Transportation Agency (GTA) is taxable at ‘Nil Rate’ and also has no liability under Reverse Charge Mechanism (RCM).
The applicant M/s Prahallad Ray Rekhraj Agarwal is a proprietorship firm and planned to enter into the Business of Transportation of Goods.
The applicant does not own any Goods Transportation Vehicles (GTVs) and receive services from the persons who own GTVs. The owner has complete control over the vehicle including driver and all incidental expenses.
The personal hearing was conducted and the authorized representative Prakhar Jain, CA and Ashis Agarwal (Son of applicant) appeared before the authority to put forward the contentions.
The authority highlighted the response of the jurisdiction officer to a letter addressed to the Assistant Commissioner of State Tax stating that services provided by hiring a GTA for the purpose of transporting goods are free from the GST under HSN Code 9966. Additionally, both the RCM and the GST are exempt. As there is no tax, the use of the Input Tax Credit will likewise remain unchanged.
Under GST, the definition of Goods Transport Agency is provided in clause 2 (ze) that “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.
The bench of members Sonal K. Mishra and Rajesh Kumar Singh highlighted that if the GTA hires a means of transportation of goods, GST payable would be Nil on such transaction.
The authority arrived at the conclusion that the service of providing a means of transportation for rent to the applicant GTA entitled for the GST of Nil rate. Additionally, the issue of taking an input tax credit does not come up when there is no tax due.
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