The Gujarat Authority of Advance Ruling (AAR) consisting of Atul Mehta and Arun Richard has ruled that 18% GST is payable on the transportation of parcels by the Gujarat State Road Transport Corporation (GSRTC) in its buses.

GSRTC operates more than 8,700 buses daily and is engaged in intra state as well as interstate passenger transportation. It is mainly engaged in passenger transportation services.

GSRTC entered into an agreement with M/s Ashapura Trade and Transport Private Limited to provide space in its buses, on top of the bus as well as in the bus cabin, for transporting parcels for Ashapura. The parcels were booked by Ashapura and transported by the buses run by GSRTC from one station to another station, which comes on its (bus route) scheduled route. It was not issuing any consignment notes, nor was it engaged in door-to-door delivery of the parcels booked by Ashapura. For the transportation of parcels, GSRTC receives consideration as per the agreement. Ashapura is a courier agency or GTA.

The main activity that distinguishes a courier agency from other transport agencies is that the courier agency arranges transportation from the door of the sender to the door of the addressee. In other words, the documents, goods, or articles are expected to be picked up by the representative of the courier agency from the premises of the sender and later transported and delivered to the premises of the addressee. 

GSRTC is not engaged in door-to-door transportation of time-sensitive documents. Rather, it was Ashapura that collected documents and parcels and delivered them to the ultimate customer at their address. It was Ashapura, which is engaged in the door-to-door transportation of documents and parcels. GSRTC is merely transporting goods in its buses that are being handed over by Ashapura from one destination to another destination. GSRTC does not have knowledge as to whom the document or parcel ultimately belongs to.

The GSRTC has sought an advance ruling on the issue of whether GST will be applicable on the parcels of Ashapura that are being transported by GSRTC.

Yet another issue raised was whether GSRTC was eligible to avail exemption in terms of Sr.No 18 of Notification No 12/2017-Central Tax (Rate) whereby GSRTC is transporting parcels of Ashapura but is neither a GTA nor a courier agency.

The AAR observed that the specific activity of GSRTC supplying parcels of office space/cabin/shed to Ashapura falls under the category of infrastructural support services, which is a subset of Business Support Services. GSRTC supplies business support services to its service recipients.

For various reasons, the AAR held that though GSRTC transports goods by road in its buses and issues parcel receipts, the activity of GSRTC does not fall under the goods transport agency service.

Firstly, the service description in the subject matter is Business Support Service, and GSRTC supports the services to be supplied by Ashapura to its (Ashapura's) recipients.

Secondly, GSRTC in the agreement submitted that it is not responsible or liable in case the parcels, courier covers are lost or damaged in transit, in the buses or premises or bus stations, and the recipient shall be solely responsible and liable for the same.

Thirdly, the consideration received by GSRTC includes charges for transportation of parcels and charges for providing parcel office space.

The Authority ruled that GSRTC is neither a GTA nor a courier agency.