All about transportation of goods by Road under GST (updated)- Detailed discussion
- CA Amarjeet Jaiswal
- Sep 20, 2020
- 7 min read
Discussion on exemption notifications, GTA, ITC, RCM, Tax invoices and much more aspects.
Transportation of goods by road is backbone and a vital activity of the economy and any disruption in such activities may leads to major losses to the corporate and consequently may hit the economy.
Let's begin to understand everything about transportation of goods under GST regime -
What are the exemptions available for transporatation of goods under GST
As per S.no 18 of notification 12/2017- Central rate
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.
From the above exemption, all the service provided by way of transportation of goods are exempt from GST . GST is applicable only on services provided by Goods Transport Agency and courier agency*
*Courier agency - Means any person engaged in door-to door transportation of time-sensitive documents, goods or articles utilizing the service of a person. either directly or indirectly, to carry or accompany documents, goods or articles.
Definition of Goods Transport agency -
"Goods transport agency" means
any person who provides service in relation to transport of goods by road
issues consignment note, by whatever name called.
This is important to note that issuance of consignment note (Bilty) is very important characteristic of GTA.
Service provided by person who does not issue consignment note is not taxable
If driver of goods carriage is self employed either by taking vehicle on rent or as owner of one or two vehicles, he does not issue any consignment note, rather he has direct contract with consignor/consignee, he himself receives freight and hence he is not liable to service tax.
At the regime of service tax, various case laws has confirmed that there is no liability to pay service tax on the recipient of the service in cases of transportation undertaken by the individual truck perator and not by goods transport agencies. ( Case law - Shanti fortune Vs CC (2010) etc.)
Issues of bills by individual trucks owners is not consignment note. The transporter is not GTA. Hence service tax is not payable - (Kisan Sahkari Chinni Mills Ltd Vs CCE (2014)
Thus law needs to be interpreted keeping this aspects in mind.
Intention of government is to tax only services provided by transport booking agents.
What is a consignment note?
A consignment note is a document regarding the carriage of goods by road which declares the contract of carriage and includes the instructions given to the carrier and proves the contract of carriage.
Article 4 of the CMR states that the contract of carriage shall be confirmed by the drafting of a consignment note.
Once a consignment note has been drafted, then it's the responsibility of the transporter to deliver the consignment to the consignee within time and without any damage.
If a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency.
Content of Consignment note
The matters which must be included in consignment note are the following -
(a) The date of the consignment note and the place at which it is made out;
(b) The name and address of the sender;
(c) The name and address of the carrier;
(d) The place and the date of taking over of the goods and the place designated for delivery;
(e) The name and address of the consignee;
(f) The description, regarding common use, of the nature of the goods and the method of packing, and, in the case of dangerous goods, their generally recognized description;
(g) The number of packages and their special marks and numbers;
(h) The gross weight of the goods or their quantity otherwise expressed;
(i) Charges to be paid by sender, receiver or third party.
Exemption provided to services of GTA sector -wise
2. As per S.no 21A of notification 12/2017- Central rate amended by CGST Notification rate 32/2017
Services provided by a goods transport agency to
an unregistered person,
an unregistered casual taxable person,
are exempt, except followings:-
(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 for the time being in force; or
(d) any body corporate established, by or under any law for the time being in force; or
(e) any partnership firm whether registered or not under any law including association of persons; (Firm includes LLP)
(f) any casual taxable 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.
It means supply of service of GTA to any unregistered person an unregistered casual taxable person are exempt via said notification and services provided to (a) to (f) shall be taxable either under NCM or RCM.(discussed in later part).
Exemption provided to services of GTA on specified goods and monetary limit wise
3. As per S.no 21 of notification 12/2017- Central rate
Services provided by a goods transport agency, by way of transport in a goods carriage of -
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments.
The above exemption provides two different amounts - Rs. 750/- and Rs. 1500/-
The exemption limit of Rs. 750/- applicable on "single consignee" which says transportation of ALL goods for a single consignee does not exceed Rs. 750/- . It has been inserted to avoid tax evasion by issuing multiple consignment note under Rs 750/- for a single consignee.
The exemption limit of Rs. 1500/- applies to all consignments to all consignee i.e. full load case. There may be more than one consignment to more than one consignee, but total freight of all consignments together in one trip should not exceed Rs. 1500/-
Exemption to service of giving vehicle on hire to GTA
4. As per S.no 22 of notification 12/2017- Central rate
Services by way of giving on hire to a goods transport agency, a means of transportation of goods is exempt from GST.
Thus, there is no GST on vehicles given to GTA.
When a GTA is liable to be registered?
1. Forward charge Mechanism-
From 22nd Aug'2017 vide Notification-20/2017(CGST Rate) (Point No-iii) GTA has been given the option to opt to pay GST in Forward Charge method “@6%CGST+6%SGST/UTGST=12%GST.
It means GTA who are having their own vehicles and having huge ITC on capital goods may used this option to pay GST@12%, then GTA has been given an option to register and pay GST@12% on all the taxable supplies under forward charge.
2. Reverse Charge mechanism-
As per Section 9(3) read with notification no. 13/2017-Central Tax (Rate) , supply of services by a GTA (who has not paid central tax @6% as above) in respect of transportation by road, the following persons shall pay the GST under reverse charge:-
Factory registered under the Factories Act,1948;
A society registered under the Societies Registration Act, 1860 or under any other law
A co-operative society established under any law;
A GST registered person
A body corporate established by or under any law; or
A partnership firm whether registered or not (including AOP)
Casual taxable person
As per Section 23(2) read with Notification No. 5/2017 – Central Tax
The Central Government specified the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the said Act as the category of persons exempted from obtaining registration under the aforesaid Act.
Hence, reading above mentioned sections and exemption at Sl.no 2 above, it can be concluded that after 13-10-2017, the GTA itself is never liable to pay GST, except under forward charge explained above.
Who is liable to pay GST under RCM?
As per Notification No. 13/2017- Central Tax dated 28/06/2017 the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the receiver of service.
Thus, if sender pays the GTA and he follows under sectors mentioned above, he shall pay the GST as recipient and not by receiver and vice-versa.
Input tax credit of GST paid on GTA service
Assessee can avail Cenvat credit of GST paid on transportation of goods. Consignor/Consignee, as case may be, can avail ITC on such service paid in cash.
Determination of Place of Supply for a GTA
As per secction 12(8), the place of supply of services by way of transportation of goods, including by mail or courier to–
(a) a registered person, shall be the location of such person
(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation i.e loading place.
Tax Invoice of GTA (Rule 54(3) of CGST Rules, 2017)
In case of GTA supplying taxable services in relation to transportation of goods by road in a good carriage,
the GTA shall issue tax invoice containing ( in addition to normal tax invoice as mentioned in rule 46 f CGST Rules,2017)
Name of the consignor and the consignee
Registration number of goods carriage in which the goods are transported
Details of goods transported
Gross weight of the consignment
Details of place of origin and destination
GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency.
Special discussions
GST on outward freight charged in tax invoice in case of FOR contracts
In case of FOR contract, supplier arranges transport. In that case, he pays the GTA and hence become recipient and liable to pay GST on such service under RCM. In turn, supplier add freight charges in tax invoice of goods which becomes part of value of goods and hence considered as composite supply as per section 8 of CGST Act, 2017 and GST, at same rate as that of principal supply, is payable on value including outward freight.
Conclusion
GTA shall not be liable to pay GST in any case except, in case of he opts to pay GST under forward charges.
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