QUESTION

The oil company like Indian Oil, Hindustan Petroleum etc generally hired the oil tanker from different person and paid the hiring as per the agreement entered between them. The Oil company supply the Petroleum and Diesel on destination station basis and paid GST on GTA @ 5% on the amount they declared in the value. But they paid amount of hiring charges to different person as per the rate agreement. The question is whether the concern who has supplied the Oil tanker to oil company is providing any service or not and whether they are required to pay the GST on the amount received from the oil company under supply of tangible goods. Regards

ANSWER

FACTS OF THE CASE:
Different persons gave oil tanker on hire charges to oil companies who used these tankers to supply petrol and diesel on GTA basis and charged 5% gst on this GTA service. To decide whether GST is applicable on the hire charges paid by the oil company to people from whom the tankers were taken on hire.

LAW APPLICABLE:
Notification 12/2017 Entry number 22 exempts the following from charge of GST :
"Services by way of giving on hire
..(b) to a goods transport agency, a means of transportation of goods."

INTERPRETATION:
By the virtue of notification 12/2017 the service of giving on hire any means of transport to a GTA shall be exempt from GST.
Clause 2(ze) of the said notification defines GTA as " 'goods transport agency' means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called".
Although the oil company is engaged in supply of petrol and diesel but in addition to that it also undertakes the role of transporting the oil and hence the oil company is supplying GTA service to the exten of transporting the oil. Therefore giving on hire any oil tanker to the said company are covered by entry number 22 of notification 12/2017 CGST rate.

CONCLUSION:
Hire charges are exempt under notification no. 12/2017 CGST rate. (Reply dt. 20/08/2021)