Provisions related to GST on Goods Transport Agency

What is GTA?

As per Notification No. 11/2017 dated 28th June 2017, GTA (Goods Transport Agency) means any person providing goods transportation service by road and issues consignment note, by whatever name called. It is important to note that only who hire out vehicles for goods transportation and issues a consignment note is considered as a GTA. Therefore, the issue of a consignment note is a mandatory condition to be considered as a GTA. In this article we will discuss about GST on Goods Transport Agency.

Services provided by a Goods Transport Agency

The services provided by GTA not only contains actual transportation of goods but other ancillary service provided such as-

• Packing and unpacking services
• Loading and unloading services
• Trans-shipment services
• Temporary warehousing etc.

If these ancillary services are provided as independent activities, then they will be covered under GTA.

What is a Consignment Note?

Consignment note is a documented evidence issued by a GTA against the receipt of goods for the purpose of goods transportation by roadways in a goods carriage. Where a consignment note is issued, it implies that the lien on the goods has been transferred and the transporter of the goods becomes responsible for the goods till it’s safely delivered to the consignee.

In general, a consignment note is serially numbered and includes the following:

• Name of the consignor
• Name of the consignee,
• Description of the goods transported,
• Registration number of the vehicle in which the goods are transported,
• Details of the place of origin
• Details of the  place of destination,
• The person who liable to pay GST – whether GTA, consignor or the consignee.

Whether a Goods Transport Agency is liable to register under GST?

As per Notification number 5/2017 dated 19/06/2017, a person who is wholly engaged in the supply of taxable goods/services on which reverse charge (RCM) is applicable, such person is exempted from obtaining GST registration.

Therefore, a Goods Transport Agency is not required to register under GST if he is exclusively engaged in transportation goods where the tax is required to be paid under reverse charge by the recipient of the goods (even if the turnover exceeds 20 lakhs).

Who will pay the GST while hiring a Goods Transport Agency?

Where a Goods Transport Agency provides the services to the specified businesses then the recipient of such services are required to pay GST under reverse charge.

Such following businesses (recipient of services) are:

• A person registered under GST
• A Casual taxable person
• A body corporate established by or under any law; or
• A co-operative society;
• A Factory registered under the Factories Act;
• A society registered under the Societies Registration Act, 1860
• A partnership firm (including AOP)

As per Notification number 13/2017, dated 28/06/2017 the person who is liable to the goods carriage freight for the transportation of goods, located in the taxable territory shall be treated as the receiver of service.

Payment is by the sender

If the consignor (supplier) of goods pays the freight to Goods Transport Agency, then the sender (supplier/consignor) will be treated as the recipient. If the sender (supplier/consignor) belongs to the category of persons as mention above then he will pay GST under reverse charge.

Payment by Receiver

Where the freight liability lies with the consignee (receiver), then the consignee will be treated as a receiver of the services. If consignee belongs to any of the above-mentioned categories of persons, then consignee will pay GST under reverse charge.