Invoice Value is Deemed Value for Related Parties; Transport to Unregistered Persons is GST-Exempt.

The applicant sought an advance ruling on two key issues:

What is the correct value of supply for goods (cement and iron) sold to related parties who are eligible for full Input Tax Credit (ITC)?
Are transport services provided to unregistered persons (without issuing a consignment note) liable to GST?

The applicant, a trader of cement and iron, supplied goods to both unrelated customers and a related person (a firm owned by a family member).
The related person was eligible to claim full ITC on the purchases.
The applicant also transported goods for customers using a tempo van, did not issue any consignment notes, and primarily serviced unregistered persons.

The Authority for Advance Ruling (AAR) made the following rulings:

Supplies to Unrelated Persons: For sales to unrelated customers, the value of supply is the “transaction value” (the price on the invoice), as per Section 15(1) of the CGST Act.
Supplies to Related Persons: For sales to the related person who is eligible for full ITC, the value declared in the invoice is deemed to be the open market value. This is in accordance with the second proviso to Rule 28 of the CGST Rules.
Transport Services:
- The authority noted that since the applicant does not issue a “consignment note,” they do not meet the definition of a Goods Transport Agency (GTA) as defined in para 2(ze) of Notification No. 12/2017-CT (Rate).
- However, even if the service were classified as a GTA service, it would still be exempt from GST.
- The exemption under Entry No. 21A of Notification No. 12/2017-CT (Rate) (as amended) applies to services provided by a GTA to an unregistered person.

Valuation Rule for Related Parties (with ITC): This ruling confirms a significant trade-facilitation measure. When supplying to a related party who can claim 100% of the ITC, the value declared on the invoice is accepted as the taxable value, eliminating the need for complex “open market value” calculations.
Consignment Note is Essential for GTA: To be classified as a “Goods Transport Agency” (GTA) under GST, a transporter must issue a consignment note. A person who transports goods by road without issuing one is prima facie not a GTA.
Exemption for Transport to Unregistered Persons: Transport services provided by a GTA to any unregistered person are exempt from GST. This is a crucial exemption for transporters who deal largely with retail customers, farmers, or other unregistered businesses.