2025-VIL-196-AAR
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SGST Advance Ruling Authority

GST - Tamil Nadu AAR - GST Exemption on Escrow Account/Current Account used solely to facilitate transfer of freight amounts - The applicant operates an online portal to facilitate connecting shippers and carriers across India without directly undertaking any responsibility for physical movement of goods. After shippers pay major portions of freight directly to carriers, they deposit the balance amounts into the applicant's account for forwarding it in full to the carrier's accounts upon delivery fulfillment. The applicant's role is limited to facilitating this transfer of funds as received, without any charge, markup, deduction or utilization, as part of their subscription-based obligations. They sought advance ruling on whether this freight amount deposit is liable for GST - Whether the applicant is liable to pay GST on the balance freight amounts deposited by shippers into the applicant's account for onward transfer to carriers - HELD - The freight amount held by the applicant cannot be considered as 'consideration' from the applicant's perspective, as it does not represent payment for any supply of goods or services by the applicant. The proviso to Section 2(31) of CGST Act clarifies that a deposit is not to be treated as consideration unless the supplier applies it as such. Furthermore, the activity of the applicant in holding and transferring the freight amounts does not constitute a 'supply' under Section 7 of CGST Act, as it is merely a facilitating role without any consideration accruing to the applicant - Since the freight amount does not represent consideration for a supply, and the applicant's activity does not amount to a supply, the applicant is not liable to pay GST on such freight amounts - The applicant is not liable to pay GST on the balance freight amounts deposited by shippers into the applicant's current account, which is meant to be forwarded to the carriers without any deduction – Ordered accordingly
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