In re Janaki Maha Lakshmi Traders (GST AAR Andhra Pradesh)
M/s Janaki Maha Lakshmi Traders (the applicant), engaged in the trading of cement and iron and the transportation of goods by road, sought an Advance Ruling from the Andhra Pradesh AAR on the correct valuation of goods supplied to related and unrelated persons, and the taxability of its road transportation services.
The applicant operates two business verticals:
1. Trading of Cement and Iron: Sales are made to wholesale and retail customers (registered or unregistered), and also to a related person, M/s Janaki Maha Lakshmi Steels, for which the applicant’s mother is the proprietrix.
2. Transportation of goods by Road: The applicant uses a tempo van to provide services primarily to unregistered persons (farmers or individuals). The applicant stated that it does not issue consignment notes or assume lien on the goods, issuing only a bill.
Advance Ruling Questions and AAR’s Decision
The AAR issued a binding ruling on four questions concerning the valuation of supply under Section 15 of the GST Act and the liability to pay tax on transport services.
| Question Area | AAR’s Ruling | Statutory Basis |
|---|---|---|
| I. Value of Supply to Unrelated Person | Transaction value, which is the price actually paid or payable. | Section 15(1) of the GST Act, 2017. |
| II. Value of Supply to Related Person (Eligible for Full ITC) | Invoice value (The value declared in the invoice shall be deemed to be the open market value). | Second proviso to Rule 28(1) of the CGST Rules, 2017. |
| III. Liability to pay tax on road transport services to an unregistered person? | No, the registered person is not liable to pay tax. | Serial No. 21A of Notification No. 12/2017-CT (Rate) as amended by Notification No. 32/2017-CT (Rate). |
| IV. Applicable Exemption Notification for transport services to unregistered persons? | Serial No. 21A of Notification No. 12/2017-CT (Rate) as amended by Notification No. 32/2017-CT (Rate) is applicable. | Serial No. 21A of Notification No. 12/2017-CT (Rate) as amended by Notification No. 32/2017-CT (Rate). |
Key Discussion and Findings
