GTA Services to Unregistered Persons Held Exempt – AAR Andhra Pradesh

BRIEF FACTS:

The applicant, is engaged in two business activities trading in cement and iron, and providing transportation of goods by road using a tempo van. The applicant sells cement and iron to both registered and unregistered wholesale and retail customers, and also to a related party, a proprietorship concern owned by the applicant's mother, who is eligible for full input tax credit (ITC). For transportation services, the applicant mainly transports goods for unregistered persons such as farmers, without issuing consignment notes and only providing a bill, as the goods are moved at the consignor's risk. To clarify the correct GST valuation for supplies to unrelated and related persons, and to determine GST liability and applicable exemption notifications for transportation services provided to unregistered persons, the applicant sought an advance ruling before the Authority for Advance Ruling, Andhra Pradesh.

ASSESSEE'S CONTENTION:

The applicant contended that the value of supply for sales of cement and iron to unrelated customers must be taken as the transaction value under Section 15(1) of the GST Act since the parties are not related and price is the sole consideration. For supplies made to the related concern, , the applicant argued that Rule 28 applies, and because the recipient is eligible for fullITC, the invoice value should be deemed the open market value. With respect to transportation services, the applicant submitted that he does not issue consignment notes and does not assume responsibility for the goods, and therefore should not be treated as a Goods Transport Agency; consequently, the freight collected for transporting goods for unregistered persons should be exempt under Serial No. 18 of Notification 12/2017. Additionally, the applicant contended that even if considered a GTA, services provided to unregistered persons are fully exempt under Serial No. 21A of Notification 32/2017, and hence no GST is payable on such transportation services.

DEPARTMENT'S CONTENTION:

In the present case, the jurisdictional officer submitted that there were no pending proceedings on the issues for which the applicant sought an advance ruling, and accordingly conveyed no objection to the Authority examining the questions raised. Apart from confirming the absence of any ongoing or prior adjudication, the Department did not advance any independent arguments, counter submissions, or interpretational objections regarding the valuation of supplies or the applicability of GST on transportation services. As such, the Authority proceeded to evaluate the matter entirely on the basis of the applicant's submissions and the statutory provisions, in the absence of any specific departmental contention.

DECISION:

The Advance Ruling Authority held that for supplies of cement and iron to unrelated customers, the value of supply must be the transaction value, i.e., the price actually paid or payable, as prescribed under Section 15(1) of the GST Act. For supplies made to the related concern, M/s Janaki Maha Lakshmi Steels, since the recipient is eligible for full input tax credit, the invoice value shall be deemed to be the open market value in accordance with the second proviso to Rule 28 of the CGST Rules. Regarding transportation services, the Authority observed that the applicant, being a registered person providing transport services and required to issue appropriate documentation, falls within the scope of a Goods Transport Agency (GTA); however, as per Serial No. 21A of Notification 32/2017, GTA services provided to unregistered persons are fully exempt, and therefore no GST is payable. Consequently, Serial No. 21A applies, and the applicant is not liable to tax on transportation services rendered to unregistered persons.

BTA's COMMENT:

In conclusion, this advance ruling provides valuable clarity on two critical areas of GST valuation in related and unrelated party transactions and taxability of transportation services rendered to unregistered persons. By affirming that transaction value applies for unrelated customers and invoice value is acceptable for related party supplies where full ITC is available, the Authority reinforces consistency with Section 15 and Rule 28 of the CGST framework. Further, the ruling offers important relief to small transporters by confirming that GTA services provided to unregistered persons are fully exempt under Notification No. 32/2017. Overall, the decision strengthens the interpretational guidance available to taxpayers, particularly those engaged in trading and small scale logistics activities, and underscores the importance of aligning business practices with statutory valuation and documentation requirements.

Case Reference In Re: Janaki Maha Lakshmi Traders,(2025) 36 Centax 421 (A.A.R. – GST – A.P.) AAR No.: 05/AP/GST/2025, Date of Order 14 July 2025

Author: Madhurima Bose

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