Notification Article on GST Applicability on Goods Transport Agency, (GTA) Transporters, Discussion on Options available to Transport Operators i.e. Forward Charge or Reverse Charge

Financial Year: 2017

 

ARTICLE  ALONG WITH AMENDMENTS AND NOTIFICATIONS ON SERVICES OF GOODS TRANSPORT AGENCIES

 

Transport of Goods by Road:-

 

We know that Transport of goods hold a very crucial role in movement of goods in any country because it is not practicable to manufacture goods in every corner of the country, so there is a need for transport services by road.

 

Govt Vide Notification No 12/2017 Central Tax Rate Dated 28^th June 2017 has made some exemptions (Point No 18)

 

Complete Copy of Notification No 12/2017 as amended by time to time

 

 Services by way of transportation of goods-

(a)  by road except the services of:-

           (i)  a goods transportation agency;

           (ii) a courier agency;

(b) by inland waterways

 

So  Services of Transport of Goods are exempt but services if provided by Goods Transport Agency or by Courier Agency then GST Will be applicable.

 

 

 

What is the meaning of Goods Transport agency:-

 

As per Notification No 11/2017 central tax rate dated 28^th June 2017 (Point No 9(iii) Explanation):-

 

“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

 

In Common Parlance we talk about Bilty in the name of consignment note, Both are same.

The benefit of consignment note is that ownership of goods stands transferred to the transporter the moment goods are handed over to the transporter.

 

So consignment note is must for services to be covered under reverse charge.

If transporters doesn’t provide Consignment Note i.e. Bilty then GST under reverse charge is not applicable.

Govt has excluded small transporters from Goods Transport Agencies who doesn’t issue consignment note and doesnt make any record.

Since small transporters doesn’t issue consignment note they are not Goods Transport Agencies and hence there will not be any GST Payable either on forward charge or on reverse charge.

 

 

GST Rate for GTA Operators:-

 

As per Notification No 11/2017 Central Tax Rate, there will be CGST Rate of 2.5% on GTA Servcies and No GST Input will be allowed to GTA Operators. i.e. Total GST of 5%

 

Reverse Charge from 01^st July 2017 itself:-

 

Government has notified reverse charge on GTA Services under Notification No  13/2017 central tax rate dated 28^th June 2017 applicable from 1^st July 2017 i.e. from very first day of the commencement of this act.

 

Reverse charge was applicable if transport services are provided by GTA to following persons.

 

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948);or

 (b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

 (d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons or

(g) any casual taxable person.

 

Such Persons are required to pay GST Under reverse charge and after paying GST under reverse charge can take GST input of such GST Paid.

No exemption limit of Rs 20 Lakhs will be made available to such assesses i.e. suppose if partnership firm has a annual turnover of Rs 5,00,000 only even then they are required to get GST Registration and discharge the liability under reverse charge.

 

Section 24 (mandatory registration point no (c)) overrides section 22(1)

 

Persons Excluded from reverse charge:-

(a)  If GTA Provides Services to another transporter.

(b)  GTA Services to individual.

 

In these 2 cases forward charge will prevail and GST will be required to be discharged by the transporters

 

Practical Problem for Transport Agencies i.e. No Input Tax Credit allowed to Transport Operators:-

 

Transport agencies normally

(a) purchase trucks and there is GST applicable at rate of 28% on trucks

(b) Purchase Insurance and there is GST applicable at rate of 18% on insurance

(c) Purchase tyres and there is GST applicable on tyres at the rate of 28%

(d) Maintenance activities mostly in 18% GST Rates.

 

So Transporters purchasing huge quantity of trucks were facing loss due to mandatory reverse charge by the government.

 

So government amended the original Notification no 11/2017 by issuing a Notification no 20/2017 central tax rate dated 22^nd August 2017 and introduced that if GTA discharges CGST at 6% on all outward supplies i.e total GST of 12% then GTA can take GST input of goods as well as services.

 

Govt also vide Notification no 22/2017 central tax rate dated 22/08/2017 amended Notification No 13/2017 central tax rate that GST under reverse charge will be payable only when GTA is not paying CGST at 6% on its supplies  i.e. 12% GST on all of its supplies.

 

So wef 22^nd June 2017 there will be reverse charge only when GTA is not issuing a invoice under forward charge with GST of 12%

 

So now there will be 3 applicable ways of discharge of GST on goods transport agencies:-

 

S No	Particulars
1	GTA can take GST input of all goods and services and will pay GST at 12% on all supplies
2	GTA will not take any input tax credit and will discharge GST at 5% on supplies not liable to reverse charge (to individuals)
3	GTA will not pay any tax and service receiver will discharge GST under Reverse Charge at 5% on all supplies received from GTA operators

 

 

 

Thanks

CA Rahul Gupta