Karnataka Co-operative Milk Producers Federation Ltd. {AUTHORITY FOR ADVANCE RULINGS, KARNATAKA}

Karnataka Co-operative Milk Producers Federation Ltd. {AUTHORITY FOR ADVANCE RULINGS, KARNATAKA} :

Date of Order : 21-05-2024

simplified explanation of the ruling by the Authority for Advance Rulings, Karnataka, in the case of Karnataka Co-operative Milk Producers Federation Ltd.:

Background:

• The Karnataka Co-operative Milk Producers Federation Ltd. (the applicant) is involved in the manufacturing of cattle feed.
• They engaged services of transporters through a tender process for transporting raw materials and finished goods by road.
• The applicant sought an advance ruling on whether GST is applicable to the services provided by individual truck owners for the transport of these goods, including loading and unloading.

Ruling Explanation:

• Consignment Note Requirement: The ruling emphasized that for goods to be transported, it is mandatory for the transporter or contractor to issue a transport document, which in this case qualifies as a consignment note.
• Definition of Goods Transport Agency (GTA): The ruling referred to the definition provided under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which defines a GTA as “any person who provides service in relation to transport of goods by road and issues consignment note.”
• Qualification as GTA: Since the document issued by the transporter contained all necessary details related to the transport of goods, meeting the criteria of a consignment note, the transporter or contractor was deemed to qualify as a Goods Transport Agency (GTA).
• GST Liability: Therefore, the services provided by individual truck owners, acting as GTAs for the transport of raw materials and finished goods (including loading and unloading), are liable to GST under the provisions of the Central Goods and Services Tax Act, 2017 and Karnataka Goods and Services Tax Act, 2017.

Implications:

• The ruling clarifies that the issuance of a consignment note by the transporter is pivotal in determining whether the services provided fall under the scope of a Goods Transport Agency.
• It underscores the requirement for GTAs to comply with GST obligations, ensuring that services related to the transport of goods by road are subject to taxation under GST laws.

Conclusion:

• This advance ruling provides clarity on the GST liability for services rendered by individual truck owners engaged in transporting goods, affirming that their services are indeed subject to GST when they qualify as Goods Transport Agencies by issuing consignment notes.

This ruling aids businesses in understanding their GST obligations concerning transportation services and ensures compliance with the relevant tax laws.

Section Reference : 9 of CGST Act.