In re Posco India Steel Distribution Centre Pvt Ltd (GST AAR Maharashtra)
Q 1. What will he the classification of the services (whether under service codes 996511 or 996791 or 996799 or any other) of the Applicant in case the Applicant issues the consignment note however, the actual transportation is done through the third-party transporter (who also issues the consignment note)?
As per the Explanatory Notes to the scheme of Classification of Services, the service code Heading 996791 includes; freight brokerage services; freight forwarding services (primarily transport organization or arrangement services on behalf of the consignor or consignee); freight consolidation and break-bulk services.
Service code Heading 996799 includes; type rating services (aircraft-specific permits for flying a particular type of plane); liquefaction and regasification of natural gas for transportation; radio navigational aid locating services, such as GPS (global positioning system) provision.
From the submissions made by the applicant we find that applicant is a ‘GTA’ providing ‘Goods Transport Agency Services’ and the services provided by them are transport of goods by road in subject case, they have a contract/agreement with POSCO group companies to provide transportation services wherein they undertake dispatch of consignments by road for POSCO group companies. We find that they are rendering Goods Transport Services to POSCO group of Companies directly.
In view of the discussions made above, in our opinion the services supplied by them would be covered under Heading 9965 which covers ‘Goods Transport Services’, Sub Heading 99651 which covers ‘Land Transport services of Goods’ and further under SAC 996511.
Question No. 2. What will be the applicable GST rate on the above services of the Applicant among the following?
– 12% (entry 9(iii) of the Notification 11/2017(CT)Rate dated 28 June 2017];
– 12% (entry 11(1) of the Notification 11/2017(CT)Rate dated 28 June 2017];
– 18% (entry 11 (ii) of the Notification 11/2017(CT)Rate dated 28 June 2017);
♥ Or any other
Having held that the services supplied by the applicant to PCSCO group of companies are covered under Heading 996511, we have no hesitation in holding that GST applicable in this case will be covered under Entry 9(iii) of the Notification 11/2017(CT)Rate dated 28 June 2017 subject to conditions mentioned therein i.e. a GST Rate of 5% will be applicable provided that credit of input tax credit charged on goods and services used in supplying the services has not been taken and a GST Rate of 12% will be applicable provided that the goods transport agency opting to pay central tax @6% under this entry on all the services of GTA supplied by it.
Q 3. Whether the Applicant would be eligible to avail the input tax credit of the 12% GST charged by the third-party transporters?
We have already held that GST applicable in this case will be covered under Entry 9(iii) of the Notification 11/2017(CT)Rate dated 28 June 2017 subject to conditions mentioned therein i.e. a GST Rate of 5% will be applicable provided that credit of input tax credit charged on goods and services used in supplying the services has not been taken. However, if applicant opt to pay GST at the rate of 12%, in such a case, they can avail ITC subject to satisfying the provisions of Chapter V of the CGST Act, 2017. As far as the services provided by third party transporter to applicant are concerned, prima facie it appears that the third party transporters are classifying their services under Entry 22 (b) of Notification 12/2017 dt. 28.06.2017 and are not levying any tax on the services supplied by them to applicant. As no GST is p: id by third party transporter, the applicant will not be entitled for any input tax credit on services provided by third party transporter.
Q 4. Whether the transporter would be right in charging GST @12% under forward charge mechanism to Applicant in terms of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017 when Applicant as the main contractor is already charging GST @ 12% same Notification, which is going to remain unchanged?
The question raised does not pertain to supply undertaken or to be undertaken by the applicant and therefore in view of the provisions of Section 95 of the CGST Act, 2019, this authority cannot answer the question.
Q 5. Procedurally, is it correct to have two GTA Service Providers and two consignment notes for the same movement of goods, one issued by the Applicant as main contractor and the other by transporters sub-contractor?
The question raised here pertains to procedure to be followed. The question does not fall under Section 97 (a) to (g) of Section 95 of the CGST Act, 2017;. and therefore this authority refrains from answering the said question.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,MAHARASHTRA
PROCEEDINGS
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. POSCO INDIA STEEL DISTRIBUTION CENTRE PVT LTD. the applicant, seeking an advance ruling in respect of the following questions.
1. What wilt he the classification of the services (whether under service codes 996511 or 996791 or 996799 or any other) of the Applicant in case the Applicant issues the consignment note however, the actual transportation is done through the third-party transporter (who also issues the consignment note)?
2. What will he the applicable GST rate on the above services of the Applicant among the following?-
– 12% (entry 9(iii) of the Notification 11/2017(CT)Rate dated 28 June 2017];
– 12% (entry 11(1) of the Notification 11/2017(CT)Rate dated 28 June 2017];
– 18% (entry 11(ii) of the Notification 11/2017(CT)Rate dated 28 June 2017);
– Or any other
3. Whether the Applicant would be eligible to avail the input tax credit of the 12% GST charged by the third-party transporters?
4. Whether the transporter would be right in charging GST @12% under forward charge mechanism to Applicant in terms of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017when Applicant as the main contractor, is already charging GST@ 12 % under the same Notification, which is going to remain unchanged?
5. Procedurally, is it correct to have two GTA Service Providers and two consignment notes for the same movement of goods, one issued by the Applicant as main contractor and the other by transporters sub-contractor ?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the COST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to “GST Act” would means CGST Act / MGST Act.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions of the applicant made vide letter dated 30.05.2019 is as under:-
2.1 Applicant, engaged in providing logistic consultancy services and logistics management services have entered into a rate contract agreement with POSCO MAM Pvt. Ltd., Mangaon MIDC, Dist. Raigad and its entity group companies, to provide supply of services in relation to transportation of goods by road i.e. steel coils in bulk by road.
2.2 In term of the services classified under Heading no 9965 and explanation to entry No 9(iii) of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017, applicant has submitted that they qualify as Goods Transport Agency (GTA) & accordingly are discharging the GST at the rate of 12 % (6% CGST + 6% SGST) under forward charge basis and are also availing ITC. The applicant also uses vehicles of third party fleet operators, who are not charging GST in their Tax Invoices raised to applicant in the said supply of fleet / vehicles, as per the provisions of Entry No 18 of the Notification No 12/2017 CT (R ) dated 28.06.2017 read with section 11(1) of CGST Act 2017. The third party fleet operators want to issue consignment notes for the goods for which applicant company has already issued Consignment Note, in order to qualify as GTA, so that they can avail a benefit of input credit of GST paid by them.
2.3 since applicant is paying tax @ 6% CGST AND 6% SGST under the forward charge, provisions of Notification No 13 / 2017 CT(R) dated 28.06.2017, which prescribes that a recipient as to pay the taxes in the case of supply of services in relation to the transportation of goods by the GTA is not applicable in the instant case.
2.4 The applicant made additional submission on 18.06.2015, wherein they raised certain questions.
2.5 The applicant again requested that they be allowed to submit some additional details in the application, even after the above submission was made. They made a final submission on 14.11.2019 and requested this authority orally, during the course of the Final Hearing held on 14.11.2019, only to consider this final submission for the purpose of advance ruling. Vide this application they have redrafted their questions which are mentioned above.
2.6 The transport services provided by applicant includes undertaking dispatch of consignments for POSCO group companies viz. Between Customs Port and the place of business of POSCO group companies for import and export consignments; and From POSCO group companies to its customer in India.
2.7 In the instant case, Applicant has entered into a back-tc back arrangement with the logistics provider, Royal Translines Pvt. Ltd. (Transport Vender/transport Agency), under which the steel coils are transported by the Transport Vendor/transport Agency from Port of Import to POSCO-MAH’s factory in Mangaon, Raigad or from POSCO-MAH’S factory in Mangaon, Raigad to its customers in India. Consignment notes are always issued by the applicant in respect of such transportation. POSCO-MAH and POSCO-MAH customers, acknowledge the completion of the transportation services by stamping and signing the consignment note issued by the applicant on delivery of the goods in the designated premises. The Transport Vendors/ Transport Agencies are of the view that, if they also issue a consignment note for the same consignment for which applicant is also issuing a consignment note, they will qualify as GTA in terms of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017 and is accordingly, charging GST at 12% from the Applicant under forward charge at the time of raising the invoice. Thus the applicant desires to understand whether Applicant & the transport vendor/transport agency, can simultaneously act as GTA by issuing two separate consignment notes respectively, for the same transportation of goods & both are then eligible to discharge GST at the rate of 12% under forward charge to their respective customer in terms of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017.
2.8 if the answer to the above query is in the negative, whether the Transport Vendor/Transport Agency will qualify as GTA by issuing consignment note whereas the applicant will qualify as:
A. Supporting services of goods transport agency (GTA) in relation to transportation of goods under Heading 9967 attracting GST at 12% Entry 11 (i) of the amended Notification 11/2017(CT)Rate dated 28 June 2017; OR
B. Supporting services in transport under Heading 9967 Entry 11 (ii) of the amended Notification 11/2017(CT)Rate dated 28 June 2017 attracting GST at 18%
c. Intermediary thereby inter alia arranging or facilitating the supply of transportation of goods on its own account and GST at the rate of 18% is to be discharged under entry 35 of the amended Notification 11/2017(CT)Rate dated 28 June 2017
2.9 Applicant has stated that their services are covered in Service code 995511, Entry 11(ii) of the Notification 11/2017(CT)Rate dated 28 June 2017. Relevant extract of the classification scheme is reproduced below for ready reference.
