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AAAR affirms applicant can’t charge 12% GST under Forward Charge Mechanism as a GTA

AAAR affirms applicant can’t charge 12% GST under Forward Charge Mechanism as a GTA

The Maharashtra Appellate Authority of Advance Ruling (AAAR) affirmed the AAR’s ruling and held that the applicant can not charge GST at the rate of 12% under Forward Charge mechanism as a Goods Transport Agency (GTA). The Applicant, M/s Liberty Translines, owner of various goods transport vehicles, is in the business of Road Transportation and registered as GTA under GST Laws. The service rendered by the applicant is classified under SAC 996791 which is covered under reverse charge.

Sometimes, the applicant functions as a mere Transporter of goods for which consignment note is issued by some other party which acts as GTA for that transaction. Here, applicant’s service gets classified under SAC 996511 for which scheduled rate of tax is Zero percent, Applicant now wants to opt for payment of GST at the rate of 12%, on forward charge basis and avail Input Tax Credit as permitted by Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017. In Particular, there is a company named POSCO ISDC Pvt. Ltd which provides GTA service and has opted for GST payable on forward charge basis at 12%, by claiming the related ITC. Since POSCO does not have enough fleet of its own, it sub-contracts GTA service to the Applicant who provides the GTA service as a subcontractor.

The applicant raised the issue of whether the Applicant is actually asking whether they can charge GST at the rate of 12% under Forward Charge mechanism as a GTA, in terms of Notification No 20/2017-Central Tax (Rate) 2017 dated 22 August, 2017. The AAR ruled that applicants cannot issue another consignment note for the same goods and for the same transaction where consignment notes are already issued by POSCO. Hence the applicant, in respect of the subject transaction cannot be treated as a GTA and therefore cannot charge GST at the rate of 12% under Forward Charge mechanism as a GTA

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