Mere Provision of Vehicles to a Principal GTA without issuing a Consignment Note does not qualify as a GTA Service and is taxable as Rental services

In the case of M/s. Tanuja Jangir (RAJ/AAR/2024-25/21), reported at (2025) 2 TMI 720 (A.A.R. - GST - Rajasthan), the Authority for Advance Ruling (AAR), Rajasthan, ruled as follows:

Facts:

M/s. Tanuja Jangir, the applicant, is engaged in the business of providing vehicles for the transportation of goods. ?The Applicant intends to expand into a new business vertical focused on goods transport as a GTA. The Applicant is desirous of entering into agreement with other GTA’s?for transportation of goods. The applicant sought an advance ruling on whether the service of transportation of goods, as a subcontractor to a Principal GTA, qualifies for exemption under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Issue:

Whether the activity of transportation of goods provided by the applicant is exempt under Entry No. 18 of Notification No. 12/2017-CT(R) dated 28.06.2017?

Held That:

• The AAR held that issuance of a consignment note is an essential criterion for an entity to qualify as a GTA.
• The service of transportation of goods is sub-contracted to the applicant by the Principal GTA. Effectively it appears that, the contract to undertake transportation of goods is given by the consignee/consignor to Principal GTA and not to the applicant. The consignee/consignor may not be aware that the transportation will be done by the applicant. It is also possible that such sub-contract may/can also be given to some other party by the Principal GTA - the applicant is giving only vehicles to Principal GTA and thus it is Principal GTA which has the transportation contract with the consignee/consignor. Thus, the transaction in this case would be one of renting of vehicles and not that of a Goods Transport Operator.
• In this case, the applicant only provides vehicles to the Principal GTA, which issues the consignment note and is responsible for the goods' transportation.
• Since the applicant does not issue a consignment note, the service provided is classified as “Rental services of transport vehicles” under Heading 9966, which is taxable under Notification No. 11/2017-CT(R) dated 28.06.2017.
• Thus, the applicant is not eligible for exemption under Entry No. 18 of Notification No. 12/2017-CT(R) dated 28.06.2017.

Our Comments:

In our opinion, AAR did not appreciate Entry No. 22(b) of CGST Notification No. 12/2017-CT(R) dated 28.06.2017 as per which hiring or rental services to GTA is exempt. Therefore, AAR warrants review and challenge.

Compiled by Ayushi Thanvi