A person can simultaneously be a GTA and can also rent/hire vehicle to another GTA: AAR

Synopsis: The Hon’ble AAR, Karnataka in the matter of M/s Saravana Perumal has held that a registered person can be a Goods Transport Agency and a supplier of goods vehicles to another GTA on hire basis at the same time subject to appropriate tax treatments as notified.

Facts:

M/s Saravana Perumal (“the Applicant”) wants to be a registered Goods Transport Agency (“GTA”) and wants to give vehicles on hire basis to another GTA as per Notification No. 12/2017 – Central Tax (Rate) dated June 28, 2017 (“Services Exemption Notification”).

Issue involved:

Whether the Applicant can hire vehicles to another GTA?

Held:

The Hon’ble AAR, Karnataka in Advance Ruling No. KAR ADRG 98/ 2019 dated September 27, 2019 held as under:

• As per the definition of GTA under Clause 2(ze) of Services Exemption Notification and Entry 9(iii) of the Notification No. 11/2017 – Central Tax (Rate) dated June 28, 2017 (“Service Rate Notification”), when the Applicant issues a consignment note for the transportation of goods belonging to others and undertakes to transport the same for a consideration, he would become a GTA.
• Entry No. 9(iii) of the Service Rate Notification and Notification No. 13/ 2017 – Central Tax (Rate) dated June 28, 2017 (“RCM Services Notification”) provides for the tax treatment for the services provided by a person as a GTA whereas the services of providing vehicles on hire basis to another GTA is covered under Entry No. 22 of the Services Exemption Notification and this entry exempts the services by way of giving on hire a means of transportation of goods to a GTA.
• Therefore, the services provided as a GTA are different from the services provided by way of giving vehicles on hire basis to another GTA & hence are independent of each other so far as tax treatment is concerned.
• Further, there is no provision in the law barring person being a GTA from renting the vehicle to another GTA.

Important provisions:

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.”

Entry No. 22(b) of the Services Exemption Notification: