5% GST Applicable on Transport of Empty Containers by Rail: AAR Gujarat

In re Hasti Petro Chemical & Shipping Limited (GST AAR Gujarat)

The applicant, a GST-registered entity operating as a Container Train Operator (CTO), provides transportation services of goods in containers by rail and also transports empty containers to support logistics operations. They currently charge 12% GST (6% CGST + 6% SGST) on both loaded and empty container movements under Entry No. 9(iv) of Notification No. 11/2017-CT (Rate), which applies to “Transport of goods in containers by rail by any person other than Indian Railways.” However, some customers argue that transporting empty containers should fall under Entry No. 9(i), which prescribes a 5% GST rate for “Transport of goods by rail (other than services specified at item No. (iv)).” Due to inconsistent industry practices and differing interpretations, the applicant sought clarity through an advance ruling.

The applicant submitted that historically, under the service tax regime, transportation of goods by Indian Railways and transportation of goods in containers by persons other than Indian Railways were taxed differently, showing legislative intent to tax non-railway operators at a higher rate. Under GST, this distinction continues through Entry 9(i) and 9(iv). They argued that Clause (iv) applies only when goods are transported in containers, not when the container itself is being moved empty. Since empty containers qualify as “goods” under Section 2(52) of the CGST Act, their transportation should fall under Clause (i) at 5%.