DENIAL OF INPUT TAX CREDIT DUE TO ABSENCE OF ACTUAL SUPPLY: UPHOLDING PENALTY UNDER SECTION 122(1)(ii) OF CGST ACT

DENIAL OF INPUT TAX CREDIT DUE TO ABSENCE OF ACTUAL SUPPLY: UPHOLDING PENALTY UNDER SECTION 122(1)(ii) OF CGST ACT

RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Before the Bench of:

l. Sh. Rakesh kumar sharma , Member (Central Tax)

2. Dr. preetam B. Yashvant , Member (State Tax)

Case Title:-M/s K M Trans Logistics Private Limited

(GST AAAR RAJASTHAN)

Appeal No. RAJ/AAAR/APP/03/2019-20

Advance Ruling No. RAJ/AAR/2019-20/19 dated 29.08.2019

Date of Judgement Order – 20th November 19

BRIEF FACTS OF THE CASE

Para No. 3.1 The appellant M/s. K M Trans Logistics Private Limited, Jaipur, with GSTIN Rajasthan are registered under GST Law 08AACCK0420F1Z4 and engaged in providing transport services to various manufacturers of motor vehicles for carrying their vehicles from the factory to the various cities in India where the authorised dealers are located. The appellant is having registered office at Jaipur. The appellant stated that the goods will be transported using its own vehicles/lorries under E-way Bill Rules but there will be no generation of consignment note and therefore, is claiming that the services are out of the purview of GST and will categorise as non-taxable service.

3.2 The appellant filed an application dated 12.06.2019 before the Rajasthan Authority for Advance Ruling and sought Advance Ruling on the following questions:-

(i) Does Transportation by own vehicles on the basis of Invoice(s) and E-way Bill without issuing the consignment note by the Appellant Transporter will covered under exempted supply/non GST supply.

(ii) Does Rule 42 of the CGST Rules 2017 will also apply in case where there is GST and Non GST Supplies and there is a common consumption of input and input services?

3.3 The Rajasthan Authority for Advance Ruling, vide Advance Ruling No. RAJ/AAR/2019-20/19 dated 29.08.2019, have decided the aforesaid application, wherein it has been held that-

(i) The appellant is a registered GTA Service provider under GST and is not exempted from paying GST.

(ii) Where the goods or services or both used by the registered person partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies as per provisions and procedure prescribed under Section 17(2) of GST Act read with Rule 42 of GST Rules, 2017.  

Para No. 4. Aggrieved by the aforesaid Ruling (i) above, the appellant has preferred the present appeal before this forum.

RULING

Para No. 14. We find that the appellant is claiming on its official website (www.kmtrans.in) that they are serving about 90% of car makers viz. Maruti Suzuki, Toyota, Tata, Hyundai, Mahindra etc., are having Fleet Size of 1250, 35 branch offices, 32 loading stations, 80 service support. From this, it is clear that the appellant transporter is not from unorganized sector of transporters and has a vast network all over India for transportation of goods. They are providing services to various manufacturers of motor vehicles involving transportation of motor vehicles which are carried from the factory to the various cities in India where the authorised dealers are located. In this process of transportation, two types of services either by way of activity described as goods transport agency services or by way of rental services of transport vehicles can be provided. In the instant case of the appellant, if the lien of the goods is transferred and the appellant becomes responsible for the goods till its safe delivery to the consignee, the services will be classifiable as goods transport agency services and issuance of consignment note or its non-issuance does not make any difference so far as the nature of the activity carried out by them is concerned. Mere non-issuance of the consignment note in such cases does not make them entitled for exemption from payment of GST. However, if the vehicles are provided to the client on rental for use as per their requirement, the services will be classifiable as rental services of transport vehicles’.

Para No. 15. Further, the appellant is carrying E-way bill while providing transport service E-way bill is applicable as per the provisions mentioned in Notification. No. 12/2018-Central Tax, dated 07.03.2018. In the present appeal, the appellant has taken a plea that the format of E-way Bill reproduced and discussed in the impugned order along with notes appended to the format of E-way Bill, has been wrongly quoted leading to mis-interpretation of the requirement of details at column referring “Transport Document Number”. The appellant has further contended that nowhere in the E-Way Bill format is a requirement of mentioning the Consignment Note No./LR/GR issued by Goods Transport Agency or transporter and E-Way Bill can be generated without generating Consignment note/LR/GR and since there is no consignment note issued, thus, the services are out of the purview of GST and will categorize as non-taxable service. We find that the format of e-way bill, in whatever manner designed or amended, is not relevant for deciding the classification of the activity carried out by them. The nature of activity carried out by them is independent of the format of e-way bill rather e-way bill format has no connection whatsoever, with the nature of activities undertaken. In any case, mere non-requirement of mentioning of any detail in E-way Bill does not affect liability of payment of GST on any service unless the service has been exempted through an exemption Notification issued by the Government. Hence, we find that the contentions of the appellant concerning format of e-way bill are not relevant to the instant issue.

ORDER

Para No. 17. reject the appeal filed by the appellant and hold that the services to be provided by the appellant are leviable to GST, as specified under Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 (as amended) read with exemption Notifications, if applicable, as per the exact nature of services to be provided by them.