Does transportation by own vehicles on the basis of invoice and E-way bill without issuing the consignment note by the transporter be covered under Exempted supply/non GST Supply?

PJ/Case Law/2020-2021/3574

M/s KM Trans Logistics Private limited (AAR Rajasthan) RAJ/AAAR/5/2019-20 dated 20.11.2019
Brief Facts:M/s. K M Trans Logistics Private Limited are engaged in providing transport services to various manufacturers of motor vehicles for carrying their vehicles from the factory to the various cities where the authorised dealers are located. The Applicant has entered into an agreement with various parties and will be providing transportation services with own vehicles but without having LR/GR and therefore, the applicant is claiming that the services are out of the purview of GST and will categorise as non-taxable service.
Issue:

Does transportation by own vehicles on the basis of invoice and E-way bill without issuing the consignment note by the transporter be covered under Exempted supply/non GST Supply?
Whether Rule 42 of the CGST Rules, 2017 (“CGST Rules”) will also apply in case where there is GST and Non-GST Supplies and there is a common consumption of input and input services?

Applicant’s Contention:The applicant has placed reliance on Notification No. 12/2018-Central tax dated 07.03.2018. Stating that through this notification the E way bill rules were amended. They contend that ‘Transport Document Number’ required in Part-B of the E-way bill is described to the notes of the format. As per the notes “Transport Document number indicates Goods Receipt Number or Railway Receipt Number or Forwarding Note number or Parcel way bill number issued by railways or Airway Bill Number or Bill of Lading Number”, so nowhere there is a requirement for mentioning the Consignment No./LR/GR issued by GTA.
The applicant says that the ruling pronounced by AAR on the basis that without issuing Consignment Note/LR/GR goods cannot be transported or E-way bill cannot be generated is not practical. So they have applied before the Appellant authority for Advance Ruling in respect of issue no. (i).
Reasoning of Judgement:The authority has pronounced that the services provided by the appellant are liable to GST under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. It has been found by the authority that the appellant has mentioned that they will not be issuing Consignment notes but have not explained as to why they will not be issuing consignment notes and which document will govern the terms of transaction. It was further stated that service provided shall fall under the Notification No. 11/2017-Central Tax (rate) dated 28.06.2017 at S. No. 9, 10 & 11.
It is also told that, a consignment note is only a document by which the responsibilities and rights are reduced in writing and, therefore, existence or for that matter, absence of the said document cannot have any adverse effect on the responsibilities or rights as agreed between the parties. Mere non-issuance of the consignment note does not make them entitled for exemption from payment of GST.
In the instant case, if the lien of the goods id transferred and the appellant becomes responsible for the goods till its safe delivery to the consignee, the service will be classifiable as GTA services.
However, if the vehicles are provided to the client on rental for use as per their requirement, the services will be classifiable as ‘rental services of transport vehicles’. Non-requirement of mentioning of any detail in E-way Bill will not affect liability of payment of GST on any service unless the service has been exempted through an exemption Notification issued by the Government.
Comment:-Mere non issuance of Consignment note doesn’t make a person free from the liability on him. Further the contention that of the applicant that the service be treated as exempt/non GST supply is not tenable.
CA Akanksha Anchaliya

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PJ/Case Law/2020-2021/3574

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