The Authority for Advance Rulings ( AAR ) in Karnataka ruled that the services provided by individual truck owners for transport of raw materials and finished goods, including loading and unloading, are liable to GST and fall under the category of the Goods Transport Agency ( GTA ).
The applicant, M/s Karnataka Milk Federation ( KMF ), is engaged in the manufacture of cattle feed. They invited tenders from the transporters for the transport of different raw materials and finished goods from the factory to the customer’s place, and after completing the tender process, work orders were issued to the transporters who quoted the lowest price and also fulfilled the criteria mentioned in the tender documents. Most of the transporters who participated in the tender process are individual truck owners.
The issue before the AAR was to determine whether individual truck owners providing services for transportation of raw materials and finished goods fall under the definition of a GTA and if their services are liable for GST.
N. Lokesh Reddy, the authorised representative of the applicant, submitted that the transporters merely load the goods into the transport vehicles and unload the same at the destination as per the instructions of the units; the transporters carry the goods along with the invoice/ Delivery Challan and e-way bill raised by the units or vendors wherever applicable with the transport vehicle; the transporters are not issuing any other documents like consignment notes to the units; and the transporters submit the invoices at the end of the month with details of goods transported during the said month.
The applicant contended that since individual truck owners do not issue consignment notes, they do not meet the definition of GTA as per the GST Act and should therefore be exempt from GST liability.
AAR noted that while a consignment note is not explicitly defined under the GST Act or the relevant notification, they relied on the explanation provided under the erstwhile Service Tax Rules, 1994, which define a consignment note as a document issued by a transporter containing details of the consignment, consignor, consignee, place of origin, destination, etc.
The AAR bench, comprising Dr. M.P Ravi Prasad and Kiran Reddy. T, held that the absence of a formal consignment note does not exempt individual truck owners from being classified under GTA. The issuance of any document, whether a receipt or challan, indicating the transportation of goods, fulfills the criteria for GTA services.
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