Hiring of goods transportation vehicle by GTA is exempted from GST

In re Prahallad Ray Rekhraj Agrawal (GST AAR Chhattisgarh)

The AAR, Chhattisgarh in the matter of M/s Prahallad Ray Rekhraj Agarwal [Advance Ruling No. STC/AAR/04/2020/39 dated October 8, 2020] has ruled that no Goods and Services Tax (“GST”) will be chargeable on the hiring of a transportation vehicle by a Goods Transportation Agency (“GTA”) and also has no liability under Reverse Charge Mechanism (“RCM”).

Facts:

M/s Prahallad Ray Rekhraj Agarwal (“the Applicant”) is a Proprietorship firm and is planning to venture business into the business of transportation of goods by road and will issue consignment notes. However, the Applicant does not own any goods transportation vehicle and therefore, will receive hiring services from vehicle owners wherein, the vehicle owner will have complete control over the vehicle including the driver and all incidental expenses. Further, the vehicle owner will raise invoice in the name of the Applicant and the Applicant will further raise invoice in the name of customers whose goods were transported by the Applicant.

The Applicant submitted that the services by way of providing goods transportation vehicle on hire is exempt as per Entry No. 22 (b) of Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 (“the Services Exemption Notification”) which stated that services by way of giving on hire to a goods transport agency are exempt. Therefore, no liability under RCM shall arise to the Applicant as per Notification No. 13/2017- Central Tax (Rate) dated June 28, 2017 (“the Services RCM Notification”) and no Input Tax Credit (“ITC”) can be claimed by the Applicant.

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