Dear friends, a question came to me “What we will charge GST on cartage inward, loading and packing?

MY SUGGESTIVE ANSWER IS AS UNDER: (Welcome if anyone has different views on the same)

As per Section 15(2)(c) all incidental expenses like commission, packing, charged by the supplier to the recipient of supply and any amount charged for anything done by the supplier in respect of supply of goods or services or both at the time or before making/delivery of supply.

[Important to note at the time or before word is very important it means your query is only relevant if you are charging freight in bill or freight bill is issued at or before delivery and known by supplier or being carried by person who has gone for delivery or as the case may be]

Now GST clauses are applicable case to case basis,

Case 1: When freight charged in Invoice – same rate of tax as charged in goods or service, for example goods @12% then as a cost of freight will also part of bill and @12% will also applicable on it.

Case 2: If Goods are delivered by GTA under consignment then no tax applicable – it will be paid by Supplier under RCM and no tax will be charged on Invoice and will be paid separately by Supplier under RCM provisions.

Case 3: If it is raised bill separately then under GTA RCM applicable and rate is @5% and in other case it is 18%.

 Now,

1 if you have taken services of freight from un-registered person/s and at one day aggregate value is crossed Rs.5000/- then under RCM you have to pay @18% to Govt. Further, also note if in Invoice supplier has not charged GST on transportation and transporter is not GTA then recipient is not responsible for charging tax under RCM because he (recipient) has not taken services of transporter it is supplier who has delivered goods at recipient destination and already charged cost of transport in his bill therefore on recipient mistake of supplier can not be penalized. (Although, if contract is defined certain terms of supply then those terms will be decisive factors)

2. In case of GTA it is @5% whether he is registered or not, in my opinion GTA will not covered under notification No. 8/2017  for Rs.5000/- aggregate value of supply without RCM because this notification dealt only applicability of section 9(4) while GTA is covered under section 9(3) where special categories have been defined therefore if from GTA Rs.500/- service has been taken even then RCM is applicable u/s 9(3).

But it is better to say customer to pay separately freight to the freight carrier without involving supplier otherwise cost may increase to you or your recipient. Suppose from un-registered person/s you are taking services and aggregate in a single day you have taken services of 10000/- then you have to pay Rs.1800/- as GST under RCM and you have supplied to 5 persons in one day where cost per person gone only 2000/- so if they will pay to carrier that will not cover under RCM because lesser than Rs.5000/- a day if Registered Recipient and in case of Un-registered recipient it is absolutely not applicable, therefore it is better to pay individually by customer not by supplier.

Explanation for GTA & Definitions:

Any person that provides service ‘in relation to’;

  • transport of goods by road; &
  • issues consignment note.

It may be noted that the definition uses the word “means” which makes the definition restrictive and exhaustive. As defined above, the aforementioned points are the mandatory ingredients for the purpose of levy of service tax on GTA. Besides the phrase used in the definition ‘in relation to’ has extended the scope of GTA, which includes various intermediary and ancillary services such as loading, unloading, packing, unpacking, transhipment, temporary warehousing and is to be treated as part of GTA service for the successful provision of the principal service. Further, it needs to be mentioned that any service which has a direct or indirect connection with a specified service has to be treated as ‘in relation to’ that specific service.

Moreover, any person who is the owner of trucks or arranges the trucks by hiring them and provides transportation service cannot be termed as GTA. In addition to this, a GTA must have a direct contract with consignor/consignee and receive freight from consignor/consignee.

Now the question which puts many minds into dilemma is the issue pertaining to consignment note. What actually is it? Let us have a brief analysis on it.

Consignment Note

Generally, when a person deposits the goods with any transporter for the purpose of transport to a given destination, the transporter issues the lorry receipt or consignment note to the person depositing the goods. The name of the consignee is mentioned on such note. The original copy of the lorry receipt is sent by the person depositing the goods i.e. consignor to the consignee to enable him to collect the goods from the transporter.

GSTR 3B Meaning

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2 responses to “Applicability of GST in Transport Services”

  1. rajivnigam says:

    Dear Amit,
    Please check Notification No.11/2017 dt. 28/06/2017 at item No.9 heading 9965 under residuary clause (v) CGST rate is 9%.

    In Notification No.12 dt.28/06/2017 at item no.18 under heading 9965 reproduced below:
    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.
    will be taxed at NIL.
    Now question arises when we charge in bill then it is with commodity rate when done by GTA then rate specified but when services will be taken separately of Transport Service – suppose
    (1) Registered Transporter and not GTA crossed 20 lacs limit also will he not charged on GST on Invoice
    (2) If we take service from unregistered transporter other than GTA then no tax will be paid under RCM.
    If we refer second notification, Now question arises on such a big area no tax will be paid, so if I concluded correctly in my Article then no tax will be charged on following:
    (1) If kept transportation out of invoice of supply
    (2) If he is not GTA
    then No GST then my conclusion for “Not to charge in Bill” is correctly concluded. No RCM arise whether he is registered or not.

  2. Amit Walia says:

    Sir Ji,
    Transport of goods by road is exempt from Tax except
    a) GTA
    b) Courier
    under clause 9 of exemption Notification
    so if Transporter in other than GTA no Tax is chargeable / Payable
    kindly see if i am correct

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