Facts of the Case:

In this case, the applicant was providing Goods Transport Agency (GTA) services. The applicant issues valid Lorry Receipts (LRs) and transports goods by road. They have been discharging GST on GTA services at 12% under forward charge, in accordance with Notification No. 11/2017-CT(R) dated 22.06.2017, as amended, and Notification No. 13/2017-CT(R). Since they pay tax under forward charge, the applicant also avails input tax credit (ITC) on eligible inputs and input services used to provide GTA services.

The applicant now proposes to purchase renewable hydrocarbon bio-diesel (Mileage Diesel) under CTH 27101990, taxable at 18%, to be used as fuel in their trucks for providing outward GTA services.

The applicant contended that Bio-diesel is directly consumed for providing outward taxable supply of GTA service. Section 16(1) permits ITC on inputs used in the course or furtherance of business. Section 17(5) blocks ITC only for motor vehicles for transport of passengers, not goods carriages. No notification or statutory restriction bars ITC of fuel used in goods transport vehicles.

During the personal hearing, the applicant clarified that GST rate on GTA services increased to 18% w.e.f. 22.09.2025, and sought confirmation that ITC on fuel would continue to be available when they pay GST under forward charge.

Issue:

Whether a GTA who has opted to pay GST under forward charge under Notification No. 11/2017-CT(R), read with Notification No. 13/2017-CT(R), can avail full ITC of input tax paid on bio-diesel used as fuel for trucks used to provide taxable GTA services?

Held that:

The Authority noted that under Entry 9(iii)(b) of Notification No. 11/2017-CT(R), a GTA that opts to pay GST on forward charge by filing Annexure-V is eligible to avail ITC, subject to compliance with prescribed conditions. The applicant had validly exercised the option and submitted Annexure-V. Therefore, they are covered by the scheme that permits availing input tax credit.

The AAR examined Section 16(1) of the CGST Act and held that bio-diesel used as fuel for trucks is an input used in the course of furtherance of business, since it is indispensable for operating goods transport vehicles. Accordingly, it satisfies the eligibility criteria for ITC.

The Authority held that Section 17(5) restricts ITC only in respect of Motor vehicles used for transportation of persons, and Related goods/services connected to such vehicles. There is no restriction on ITC of inputs used in goods carriages, including fuel. Thus, ITC on bio-diesel is not blocked under Section 17(5).

The AAR confirmed that with effect from 22.09.2025, when GTA services attract 18% GST, the applicant may continue paying GST under forward charge, and availing full ITC, including on bio-diesel, subject to compliance with Section 16 and the conditions under Notification No. 11/2017-CT(R).

Case Name:  In Re: Amitkumar Maheshbhai Gulwani. [Trade Name: M/s Godavari Logistics]. dated 24.11.2025

To read the complete judgement 2025 Taxo.online 3192