GST implications on Goods Transport Agency

INTRODUCTION

Goods transport agency is subject matter of complex taxation. First time taxability of Goods transport agency has been brought in service tax regime which brought a lot of hues and cues in the market as they are not habitual to collect and deposit the Indirect taxes.

Firstly we shall examine the meaning of Goods transport agency.

Entry-9(iii) Explanation	Section 65B(26) of Finance Act, 1994
‘Goods transport agency‘ means any person who provides service in relation to transport of goods by road and issue consignment note, by whatever name called;”	‘Goods transport agency‘ means any person who provides service in relation to transport of goods by road and issue consignment note, by whatever name called;”

The term “Goods transport agency” has not been defined in CGST Act, but has been provided by way of Explanation to the Rate notification.

It is well settled principle of law that explanation is part of an Act itself, therefore it can be termed as Statutory Definition.

WHAT IS CONSIGNMENT NOTE?

Consignment Note is not defined in the Act. As per Explanation to Rule 4B of Service Tax Rules, 1994; consignment note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.

RATE NOTIFICATION? (NOTIFICATION NO 11/2017)

CHAPTER	DESCRIPTION	CGST RATE	SGST RATE	IGST RATE	CONDITION
Heading 9965 (Goods transport services)	(iii) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use)	2.5	2.5	5	Provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
Heading 9965 (Goods transport services)	(iii) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use	6	6	12	Provided that the goods transport agency opting to pay central tax @ 6% under this entry shall, thenceforth, be liable to pay central tax @ 6% on all the services of GTA supplied by it.

Now some of queries are discussed as below:

NOTIFICATION NO 12/2017- CENTRAL TAX RATE(ENTRY 18)

HSN	NATURE OF SERVICE	RATE	CONDITION
Heading 9965	Services by way of transportation of goods (Heading 9965) by road and issue consignment note by whatever name called, except the services of : A goods transport agency Courier agency	NIL	NIL

So, it is been specifically stated that all services of transportation of goods are exempt except two which is being mentioned supra.

EXEMPTION FOR GOODS TRANSPORT AGENCY NOTIFICATION NO 12/2017- CENTRAL TAX RATE (ENTRY 21)

GTA Services are exempt when such are used for transportation of goods specified under Notification 12/2017 CT(R). Services provided by a goods transport agency, by way of transport in a goods carriage following services are exempt:

• Agricultural Produce, Organic Manure;
• 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;
• goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
• Milk, Salt and Food Grain including Flour, Pulses and Rice;
• Newspaper or Magazines registered with Registrar of Newspapers, Defence or Military Equipment
• Relief Materials for Victims of Natural or Man – Made Disasters, Accidents, Calamities or Mishaps

Now what is being meant by “Agricultural produce” is matter of question itself.

NOTIFICATION NO 12/2017- CENTRAL TAX RATE (ENTRY 21A)

It states that Services of GTA to an Unregistered Person (including an unregistered casual taxable person) is being exempt from tax other than the specified class of person which are listed as below:

• Any Factory registered under or governed by the Factories Act, 1948 (63 of 1948)
• Any Society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law for the time being in force in any part of India; or
• Any Co-operative Society established by or under any law; or
• Any Body Corporate established by or under any law; or
• Any Partnership Firm whether registered or not under any law including association of persons; or
• Any Casual Taxable Person registered under CGST Act.

REVERSE CHARGE MECHANISM UNDER GST- NOTIFICATION NO 13/2017- CENTRAL TAX ENTRY- 1

Further, the following recipients of services, supplied by a goods transport agency (GTA), are required to pay GST under reverse charge mechanism @ 5.00 % in respect of the said services of transportation of goods by road.

• Any Factory registered under or governed by the Factories Act, 1948 (63 of 1948)
• Any Society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law for the time being in force in any part of India; or
• Any Co-operative Society established by or under any law; or
• 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
• Any Body Corporate established by or under any law; or
• Any Partnership Firm whether registered or not under any law including association of persons; or
• Any Casual Taxable Person( It must be registered)

LIABILITY TO REGISTER BY GTA?

As per Notification No. 5/2017 – CT, A GTA providing transport services to the specified persons who are liable to pay tax on reverse charge, is not required to register under GST. If their turnover crosses the threshold limit, they are not required to register under GST. This is because 100% of their supplies will be reverse charge supplies, so there is no tax liability.

A GTA which is not exclusively providing transport services to the specified persons, who are liable to pay tax on reverse charge, has to register under GST when its aggregate turnover crosses the threshold limit

PLACE OF SUPPLY:

This aspect has divergent views in certain type of transactions. Consideration and person liable to pay the consideration must be the focal point to decide POS. Transactions with consignor may be in the form of CIF. FOB, ex- factory basis. Further the freight payment may be of To-Pay basis, Paid basis, Periodical billing basis. The consignor and consignee may be same person having separate registrations in different states having branches, factories etc., The deciding factors for determination of POS are summarised as follows:

1. Supplier location–Tamil Nadu

2. Customer location – Karnataka

	NATURE	PLACE OF SUPPLY	CONSIDERATION	INTER / INTRA STATE
Case 1	On To-Pay basis to customer registered in Bangalore	Supply of service to registered person – POS – is location of such person. POS – Bangalore	Paid by Bangalore customer	Inter State	· IGST
Case 2	On To-Pay basis to a unregistered customer in Bangalore	Supply of service to unregistered person – POS – where goods are handed over POS – Chennai	Paid by Bangalore customer	Intra State	CGST TN-SGST
Case 3	On Paid basis to a registered customer in Bangalore	Supply of service to registered person – POS – is location of such person. POS – Chennai	Paid by Tamil Nadu customer	Intra State	· CGST · TN-SGST
Case 4	On paid basis to a unregistered customer in Bangalore	Supply of service to unregistered person– POS – where goods are handed over POS – Chennai	Paid by Tamil Nadu customer	Intra State	· CGST · TN-SGST

E-WAY BILLS

As per Notification no 27/2017 dt 30.08.2017 read with 74 dt 29.12.2017,

As per Rule 138:- Information to be furnished prior to commencement of movement of goods and Generation of e-way bill.-

Every registered person who causes movement of goods of

consignment value exceeding fifty thousand rupees—

(i) in relation to a supply; or

(ii) for reasons other than supply; or

(iii) due to inward supply from an unregistered person shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01 and a unique number will be generated on the said portal.

Who can Generate E- Way Bill

• the recipient may generate the e-way bill at portal
• Transporter can also generate the e-way bill except in case of Railway, Ship OR Air
• Any transporter transferring goods from one conveyance to another in the course of transit shall, before such transfer and further movement of goods, update the details of conveyance in the e-way bill on the common portal in FORM GST EWB01(Part-A&B)
• where multiple consignments are intended to be transported in one conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such consignment electronically on the common portal and a consolidated e-way bill in FORM GST EWB-02 may be generated by him on the said common portal prior to the movement of goods.

→ Validity period of E-way bills can be extended by the generator of the e-way bills either four hours before expiry or within four hours after expiry of E-way bill.

Transactions exempted from e-way bill

E-way bill is optional for: –

1. Goods of value less than Rs. 50,000

2. If Goods are being transported by a non – motorized conveyance

3. where the goods are being transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs

4. If the goods are transported within the notified area

5. Goods transported are transit From/ to Nepal/ Bhutan

6. If Goods are transported to a weighbridge within 20kms and back to the place of business by being covered under a Delivery Challan

7. Where Government or local authorities transport goods by rail as a consignor

8. Goods transported are to / from the Ministry of Defence

Non-compliance with e-way bill

Not generating and carrying an e-way bill is considered as non-compliance with the provisions of the GST law and can result in both monetary as well as non-monetary losses to the taxpayer.

Monetary implications

In case goods are moved without generating a valid e-way bill, the authorities may impose a penalty of 10,000 INR or amount of tax sought to be evaded, whichever is higher.

Non-monetary implications

It may also lead to confiscation of goods and the vehicle conveying those goods, in case the person transporting the goods or the owner of goods/conveyance fails to pay the tax and penalty within seven days of detention or seizure.

Author can be reached at bklegaladvisors@gmail.com/7986255468