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Service Provided By Way of Arranging Lorries From Lorry Owner For Transportation Facilities of Customers and Issuing Lorry Receipts Is Taxable As GTA Services

This important ruling has been given by AAR dated 8th July 2019 against an appeal filed by Balasubramanyam Saravana Perumal, registered under GST in the name and style of M/s Chitra Transport.

Nature of business of Applicant

Business activity of the applicant is to arrange lorries from lorry owners and to provide transport facilities to his customers, thus acting as an agent between the customers who require transportation facilities and the Lorry Owner. The applicant collects the transportation charges from the customers and after taking his share of commission for arranging lorries, he pays the requisite amount to the lorry owners.

Question raised before AAR

The applicant raised the following question to resolve the following issues:

  • Does he bound to pay GST on the actual amount of commission retained by him for arranging transport facility to their customers or he has to pay GST on the entire amount received from his customers without deducting the commission
  • Rate of GST payable

Decision taken by AAR and its Ground of Judgement

After analysing the case AAR held the applicant is issuing Lorry receipts (i.e. Consignment Note) under the name and style of M/s Chitra Transport and providing transport services to its customers by way of arranging lorries from Lorry owners is covered under the definition of GTA vide clause (ze) of Notification No. 12/2017 dated 28.06.2017 and taxable as “GTA services” .

Tax liability is determined accordingly vide Notification No.13/2017 dated 28.06.2017 as amended by Notification No. 22/2017 and the rate of tax on GTA services as prescribed under Notification No. 11/2017 dated 28.06.2017 as amended by Notification No.20/2017 dated 22.08.2017 which is detailed below.

AAR has made the above decision considering the following grounds:

1. As per the clause (ze) of Notification No. 12/2017 dated 28.06.2017, definition of “Goods Transport Agency” is as under

Definition of GTA

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;

Definition of Consignment note  

Consignment Note is neither defined in the Act nor in the notification no.72/2017-Central Tax (Rate). However, as per Explanation to Rule 48 of service Tax Rules,

‘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 goods transport agency.

Thus, it can be seen that issuance of a consignment note/ Lorry receipts is the sine-qua-non for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency. If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter).

Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA and will be covered by the entry at of Notification no 12/2017-Central Tax (Rate), which is exempt from GST.

2. Liability to pay GST on GTA services

In terms of Notification no 13/2017 dated 28.06.2017 as amended by Notification No. 22/2017 dated 22.08.2017, in the case of GTA services GST shall be paid on reverse charge by the recipient of services, subject to the condition that the recipient (located in the taxable territory) belong to the following category:

  • any factory registered under or governed by the Factories Act,1948.
  • any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India
  • any co-operative society established by or under any law;
  • any person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act.
  • Any body corporate established, by or under any law
  • any partnership firm whether registered or not under any law including association of persons;
  • any casual taxable person

Thus in cases where services of GTA are availed of by the above categories of persons in the taxable territory, the GTA Supplier has the option to pay tax (and avail ITC) @12%(6% CGST + 6SGST); and

If the GTA does not avail this option, the liability to pay GST will fall on the recipients. In all other cases where the recipients do not fall in the categories mentioned above, the liability will be on the supplier of GTA.

Taxable Value on which GST will be payable

Where GST is payable under Reverse charge by the recipient of service or where it is paid by GTA availing ITC, the profit i.e. the commission earned by procuring/obtaining lorries from lorry owners is not taxable in the hands of GTA.

Rate of GST on GTA service

In terms of Notification No. 11/2017 dated 28.06.2017 as amended by Notification No. 20/2017 dated 22.08.2017, the rate of tax on the GTA service at Sr. No 9 & Sr. No 11 i.e. (i) Services of GTA in relation to transportation of goods (Including used household goods for personal use) and , (ii) Supporting services in transport by GTA (heading 9965 & 9967) is 5 % (2.5 % CGST & 2.5 % SGST) subject to the condition that credit of input tax charged on goods and services used in supplying the services has not been taken .


Rate will be 12% where the GTA opting to pay tax subject to the condition that the GTA liable to pay tax @ 12% on all the services of GTA supplied by it. Further there is no restriction on the GTA from taking ITC if this option is availed.

Thus, where the GTA is not eligible to take ITC for the supplies effected by it and the liability under GST is discharged under reverse charge basis, the recipient of GTA service discharging the tax liability is entitled to take Input Tax Credit(ITC)of the amount of tax paid under Reverse charge provided it is used in the course or furtherance of business .


The above discussion shows that not all transport of goods by road is by a GTA. To qualify as services of GTA, the GTA should be necessarily issuing a consignment note. Only services provided by a GTA are taxable under GST. Services of transportation of goods by a person other than GTA are exempt. Moreover, in cases where the service of GTA is availed by the specified categories of persons in the taxable territory, the recipients who avail such services are the ones liable to pay GST and not the supplier of services unless the GTA opts for collecting and paying taxes @ 12% (6% CGST + 6% SGST). In all other cases where GTA service is availed by persons other than those specified, the GTA service supplier is the person liable to pay GST. The GTA service supplier is not entitled to take ITC on input services availed by him if tax is being charged @ 5% (2.5% CGST + 2.5% SGST).

Further, Services by way of giving on hire to a goods transport agency, a means of ‘transportation of goods’ is exempt in terms of Notification No.12/2017 dated 28.06.2017. Thus, if the GTA hires a means of transportation of goods to provide output service, no GST is payable on such.

E.g Suppose ABC. Ltd has arranged lorry from Lorry Owner for amounting to Rs. 15,000. Now, Mr. ABC Ltd has provided transportation service to customer MNC Ltd and issued Lorry receipt containing all the details. Total Invoice raised by Mr. ABC to Mr. MNC Rs. 18,000/- (inclusive of commission of Mr. ABC Ltd of Rs. 3,000/-). Calculate Taxable Value & Tax liability?


Considering the ruling made by AAR, service provided by Mr. ABC is treated as GTA service hence Mr. MNC Ltd (assuming a registered person under GST) is liable to pay tax under reverse charge as per Notification No. 13/2017 and rate of tax will be 5 % as per Notification No. 11/2017

Total Value 18,000 /-
Less: Commission earned by ABC Ltd. 3,000/-
Transaction Value 15,000/-
Tax @ 5%   750

Thanks & Regards

CA Geetanjali Pandey Rawal

Author Bio

Practising chartered accountant with the name of the firm M/s Geetanjali Pandey & Co. since 2018. I am also a Registered Valuer for valuation of Securities and Financial assets. View Full Profile

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  1. M.UDAYA KUMAR says:

    Respected madam,
    This Article pertaining to GTA is good and explained in a good manner. I request you to let me know are you having an article which shows the full configuration of TALLY with respect to GST entries like RCM, Advance received etc., If you are having the same please share in my mail id.
    Thank you madem

  2. M.UDAYA KUMAR says:

    Respected Madam,
    I am a Tax Consultant practicing for the past 35 years, TNGST, VAT, now GST, INCOME TAX, CENTRAL EXCISE and SERVICE TAX.
    Today I have read your Articles in GST, SCHEDULE I and SCHEDULE II and I very much delighted about the articles which are explained with wonderful examples. My wholehearted appreciation for your service to the Tax Community.

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June 2024