05.01.2023: GST not payable on services provided to GTA by way of giving on hire the ‘Goods Transportation vehicle’: Chhattisgarh AAR

The Chhattisgarh Authority for Advance Ruling (AAR) in the case of M/s Prahallad Ray Rekhraj Agrawal Bazar Neora vide Advance Ruling STC/AAR/04/2020/39 dated 08.10.2020, has ruled that GST is not payable on the hiring of goods transportation vehicles by the Goods Transportation Agency (GTA). 

In this case, the applicant intends to start a business transporting goods by road and will issue consignment notes. However, the applicant does not own any goods transportation vehicles and therefore will receive hiring services from vehicle owners in which the vehicle owner will have complete control over the vehicle, including the driver and all incidental expenses. The vehicle owner will raise an invoice in the name of the applicant, and the applicant will raise an invoice in the name of customers whose goods were transported by the applicant. 

The applicant is a Goods Transport Agency GTA, and it has sought an advance ruling as regards taxability, its classification, rate of tax, and eligibility for the input tax credit as they relate to the services of receipt of transportation vehicles on hire from the persons who own goods transportation vehicles to be used for providing the services of transportation of goods.

The applicant contended that the services of providing goods transportation vehicles on hire are exempt as per Entry No. 22(b) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, which states that services by way of giving on-hire to a goods transport agency, a means of transportation of goods, are exempt. The applicant has classified the services received by them as “Hiring of Goods Transportation Vehicles.”

The AAR held that, as per the definition of “GTA” in clause 2(ze) of the Services Exemption Notification, it is confirmed that the applicant is a GTA as they will be issuing consignment notes while providing the service of transportation of goods. As per Entry No. 22(b) of the Services Exemption Notification, the service by way of giving on hire a means of transportation of goods to the applicant is eligible for a nil rate of GST. The hire service is classifiable under Heading No. 9966 as rental services of transport vehicles with or without vehicles. Since the supply is taxable at a zero rate, no liability under RCM shall arise upon the applicant as per the Services RCM Notification. Further, when no tax is payable, the question of taking any input tax credit does not arise.



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