The West Bengal Authority for Advance Ruling (AAR) has ruled that the transportation services proposed to be provided by Flipkart India Private Limited under its new logistics model qualify as Goods Transport Agency (GTA) services, and that such services, when provided through the e-commerce operator‘s portal, to unregistered end-customers, are eligible for exemption under Serial No. 21A of Notification No. 12/2017–Central Tax (Rate) dated June 28, 2017.
Emphasising that the fact of issuing a consignment note can be regarded as a sine qua non for the consideration of a supplier of transport services as GTA, the AAR referred to the exemption provided by Entry no. 21A of Notification No. 12/2017 – Central Tax (Rate) dated June 28, 2017, which has been extended to GTA only, not to a courier agency, and clarified that if the transportation of goods is done entirely by road and the person transporting the goods issues consignment note, the time sensitive transportation of goods is to be considered as services by GTA.
The application arose from Flipkart’s proposal to implement a business model under which it would provide exclusive road transportation of goods to customers purchasing goods through e-commerce portals. Under the proposed arrangement, sellers would deliver goods to a designated “Source Mother Hub”, from where Flipkart would undertake transportation up to the customer’s delivery address. Flipkart would issue a single consignment note, assume responsibility for the goods during transit, and collect transportation charges from end-customers, either directly or through the e-commerce operator acting as a facilitator.
The Authority, comprising Shafeeq S (Member) and Jaydip Kumar Chakrabarti (Member), examined two questions: first, whether the proposed services qualify as GTA services; and second, whether such services would be exempt when supplied to unregistered customers through an e-commerce platform. Analysing the statutory definition of “goods transport agency”, the Authority observed that two conditions are decisive, namely the transport of goods by road and the issuance of a consignment note. The Authority held that issuance of a consignment note is the sine qua non for classification as GTA and signifies transfer of lien and responsibility over the goods to the transporter.
The AAR further noted that Flipkart’s role was confined strictly to transportation, that title in goods passed directly from seller to buyer, and that the movement of goods was carried out entirely by road, even if through multiple vehicles or transit points. Ancillary activities such as loading, unloading, trans-shipment, or temporary warehousing were held to be part of a composite supply of GTA services, in line with CBIC Circular No. 234/28/2024-GST.
Regarding the exemption, the Authority determined that a customer is considered the “recipient” under Section 2(93) of the CGST Act if they are an unregistered individual who is responsible for paying the transportation costs. As a result, the exemption under Serial No. 21A of Notification No. 12/2017 clearly applies to GTA services rendered to such unregistered clients. The AAR further explained that since courier services usually involve multi-modal transportation and do not involve the issuance of consignment notes, the proposed activity could not be compared to courier agency services.
Accordingly, the AAR answered both questions in favour of the applicant, holding that Flipkart’s proposed services qualify as GTA services and are exempt from GST when supplied to unregistered customers, subject to fulfilment of the statutory conditions.
Appearances:
Authorised Representatives Rohit Jain and Supreme Kothari, For the Applicant
