In re Gujarat State Road Transport Corporation (GST AAR Gujarat)
GSRTC entered agreement with M/s Ashapura Trade and Transport Private Limited (hereinafter referred to as Ashapura) to provided space in its buses, on top of the bus as well as in bus cabin, for transporting parcels of Ashapura. The parcels booked by Ashapura and transported by the buses run by GSRTC from one station to another station which comes in its (bus route) scheduled route. GSRTC submits that it is not issuing any consignment note, nor is engaged in door to door delivery of the parcels booked by Ashapura. For the transportation of said parcels, GSRTC receives consideration as per the agreement.
AAR finds that GSRTC provides services to such firms/ agencies (its service recipients) carrying on the business of transportation of parcels, specific allied services. We agree with GSRTC that it itself is not a courier agency as it is not engaged in door to door transportation of goods/articles/documents. It is a fact on record that Ashapura is engaged in door to door transportation of its parcel goods but not GSRTC. What we find from the agreement is that GSRTC’s services to Ashapura is supporting the business of Ashapura, by transporting the parcels of Ashapura from one destination to other, wherein Ashapura is both the consignor and consignee at the respective bus stations. Ashapura utilises the services of GSRTC for enabling it (Ashapura) for door to door delivery of parcels. Further, the specific activity of GSRTC supplying parcel office space/cabin/shed to Ashapura falls under the category of infrastructural support services which is a subset of Business Support Services. We hold GSRTC supplies Business Support Services to its service recipient. The standard agreement submitted before us asserts our findings.
Though GSRTC transports goods by road in its buses and issues parcel receipt, we are not inclined to accord this activity of GSRTC to fall under goods transport agency service for the following reasons,-
i. The service description in subject matter is Business Support Service and GSRTC supports the services to be supplied by Ashapura to its (Ashapura’s) recipients.
ii. GSRTC in the said agreement at para 7(q) submits that it is not responsible or liable in case the parcels, courier covers is lost or damaged in transit, in the buses or premises or bus stations, recipient shall be solely responsible and liable for the same.
What we find is that although a parcel receipt is issued by GSRTC, it absolves itself from any responsibility of the parcels after receipt. Thus we find it hard to equate this parcel receipt to a consignment note wherein the responsibility of the goods being transported is not on the consignee.
iii. Further, the consideration received by GSRTC includes the following:-
a. Charges for transportation of parcel
b. Charges for providing parcel office space.
In continuum to holding that GSRTC is not supplying goods transport agency service, We also concur with GSRTC that its services will not be classified as supporting services for road transport under SAC 99674.
In this specific scenario presented before us, GSRTC supplies Business Support Service to its recipient. 2. SAC is 998599, covering Other Support Services n.e.c.; GST rate being 18%.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
1. M/s. Gujarat State Road Transport Corporation (hereinafter referred to as GSRTC for the sake of brevity) submits as follows:
2. GSRTC operates more than 8700 buses daily basis and is engaged in intra state as well as interstate passenger transportation
3. GSRTC submits that it is mainly engaged in the passenger transportation services
4. GSRTC entered agreement with M/s Ashapura Trade and Transport Private Limited (hereinafter referred to as Ashapura) to provided space in its buses, on top of the bus as well as in bus cabin, for transporting parcels of Ashapura. The parcels booked by Ashapura and transported by the buses run by GSRTC from one station to another station which comes in its ( bus route) scheduled route. GSRTC submits that it is not issuing any consignment note, nor is engaged in door to door delivery of the parcels booked by Ashapura. For the transportation of said parcels, GSRTC receives consideration as per the agreement.
5. GSRTC submits that Ashapura is a courier agency or GTA.
6. GSRTC submits that the said activity is exempt in terms of Sr No 18 of Notification No 12/2017-Central Tax (Rate) which reads as follows:-
Services by way of transportation of goods-
(a) by road except the services of-
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
7. GSRTC submits that the activity will be taxable when it is of a courier agency or a goods transportation agency. Except that, all other activity of road transportation is exempt.
8. GSRTC submits as follows:-
i. As per Para 2(u) of Notification No 12/2017-Central Tax (Rate), “courier agency” means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles; the following are the essential elements to treat an activity in the category of ‘courier agency’
A. The services can be rendered by any person who is engaged in a specific service of door to door transportation of time sensitive documents, goods or articles;
B. The service is to be rendered by utilizing the services of a person, either directly or indirectly;
C. The said person is to carry or accompany the said documents, goods or articles.
D. Such transportation should be of time sensitive documents
ii. The main activity which distinguishes a courier agency from other transport agencies is that the courier agencies arranges transportation from door of the sender to the door of the addressee. In other words, the documents, goods, or articles are expected to be picked by the representative of the courier agency from the premises of the sender and later transported and delivered to the premises of addressee. In the present case, GSRTC is not engaged in door to door transportation of time sensitive documents. Rather, it is Ashapura which is collecting documents and parcels and it delivers to the ultimate customer at their address. It is Ashapura which is engaged in door-to-door transportation of documents and parcels. GSRTC is merely transporting goods in its buses that is being handed over by Ashapura from one destination and to be dropped at another destination. GSRTC does not have a knowledge as to for whom the document or parcel ultimately belongs to.
iii. The term used in the definition is that the person must be engaged in the door-to-door transportation. The term engage means to take part or devote attention and effort, to employ ones’ self as per the Law Lexicon by P. Ramnatha Iyer. While interpreting the expression ‘actively engaged in the conduct of business’ occurring in section 2(7) (iii) (b) of the Finance Act, 1962, the Gujarat High Court inter alia, observed as follows:-
“The expression ‘engaged in’ is a term of various meaning depending on the context in which it is used but ordinarily it is intended to signify continuous occupation or employment; of action as well as physical participation. However, the term is often employed to denote a present obligation to devote time, attention and efforts to a particular activity, although for a time being, there may not be any active participation or wholesome involvement in such activity”- CIT v. Natvarlal Tribhovandas (1973) 87ITR 703 (Guj)
A person can, therefore, be said to be ‘engaged in’ providing a service, if he carries on such a service, not as an isolated transaction, but as an organized and fairly continuous activity. In the present context, to fit the activity of a person in the definition of courier agency, ‘the organization must undertake courier service as an organized and fairly continuous activity and not as an isolated or occasional act or transaction. Since, GSRTC is engaged in the activity of passenger transportation by virtue of its establishment under the Road Transport Corporation Act, 1950 and therefore, is not engaged in the business of courier agency. In order to qualify the activity of a courier agency, it must be engaged in transportation of time-sensitive documents, goods or articles.
iv. In the present case, GSRTC is not engaged in door to door transportation of time sensitive documents. Rather, it is Ashapura which is collecting documents and parcels and it delivers to the ultimate customer at their address. To deliver the documents on time is the responsibility of Ashapura and not that of GSRTC. Ashapura merely uses the spaces of bus for the purpose of transportation of the documents. It is Ashapura’s discretion whether to utilize the services of GSRTC or any other entity for the purpose of delivering time sensitive documents and parcels to its customers.
V. Further, the buses run by GSRTC are as per the schedule framed by it and not as per the instructions of Ashapura to deliver its time sensitive documents and parcels that it has booked for its customers. It is for Ashapura to select and identify as to whether a particular bus will be able to transport its documents in time that it has contracted with its customers or not. For Ashapura, GSRTC is not changing its route or timings. Further, a person may have to deliver its documents in any part of India, however, GSRTC has its operations in Gujarat and few other states, but not in the entire country. Thus, the GSRTC is not engaged in transportation of time sensitive documents. From the above, it is concluded that the activity done by GSRTC is not classifiable under the definition of ‘courier agency’.
vi. As per section Para 2(ze) of Notification No 12/2017-Central Tax (Rate), “Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
vii. Para 2(zd) of Notification No 12/2017-Central Tax (Rate) defines goods carriage; “Goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988). As per Section 2(14) of the Motor Vehicles Act,”Goods carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods;”
viii. Thus, it is not disputed that the buses of GSRTC are considered as goods carriage in terms of definition as contained in section 2(14) of the Motor Vehicles Act since it is used for transportation of goods, however, that will not make GSRTC as a goods transport agency.
ix. One of the conditions for levy of GST on transport of goods by Road is that the consignment note must be issued. Consignment Note is neither defined in the Act nor in the Notification No 12/2017-Central Tax (Rate). As a reason, reference has been taken w.r.t meaning of the term ‘consignment note’ as contained in the erstwhile Service Tax Law wherein the provisions regarding issuance of consignment note is contained in Rule 4B of Service Tax Rules, 1994.
x. As per Explanation to Rule 4B, ‘consignment note” means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency’.
xi. The consignment Note shall also contain the details of the consignment note number and date, gross weight of the consignment. [2nd Proviso to Rule 4A of Service Tax Rules, 1994]
xii. GSRTC is issuing ‘Parcel Receipt’ and by no stretch of imagination, it can be considered as consignment notes. Copy of ‘Parcel Receipt’ is enclosed.
xiii. In the following cases pronounced under the erstwhile Law, it has been considered that when the transports did not issue consignment notes or GRs or Challans or any documents containing the particular as prescribed in Explanation to Rule 4B of the Service Tax Rules, 1994, the Transporters cannot be called ‘Goods Transport Agency’ and, hence, in these cases, the service of transportation of goods provided by the transporters would not be covered in the definition of Goods Transport Agency. This principle has been held in:-
