Goods Transport Agency under GST
Transportation of Goods by Road:-
In terms of Notification no. 12/2017-Central Tax (rate), Dated 28-6-2017 (sr. No 18), The Following services are exempts from GST.
Services by way of transportation of Goods-
(a) BY Road except the service of –
(i) A goods transportation agency;
(ii) A courier agency
(b) By Inland waterways.
Thus, it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.
As per Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA. Thus, a consignment note is an essential condition to be considered as a GTA.
A consignment note is a document issued by a goods transportation agency against the receipt of goods for the purpose of transporting the goods by road in a goods carriage.
If a consignment note is issued, it means that the lien on the goods has been transferred to the transporter. Now the transporter is responsible for the goods till its safe delivery to the consignee.
If a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency.
A consignment note is serially numbered and contains –
The service includes not only the actual transportation of goods, but other intermediate/ancillary service provided such as-
If these services are included and not provided as independent activities, then they are also covered under GTA.
As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is engaged in making only supplies of taxable goods/services on which reverse charge applies is exempted from obtaining registration under GST.
Thus, a GTA does not have to register under GST if he is exclusively transporting goods where the total tax is required to be paid by the recipient under reverse charge basis (even if the turnover exceeds 20 lakhs).
In terms of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by notification no. 20/2017- Central tax (Rate) dated 22.08.2017 , sr.no. 9 and sr. no. 11, (i) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) (Heading 9965 &9967 respectively) attracts GST @2.5% or 6% CGST. Identical rate would be applicable for SGST also, taking the effective rate to 5% or 12%.
However, the rate of 5% is subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken.
The Explanation to the notification further clarifies that it shall mean that,-
(a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and
(b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of subsection (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made there under GST @ 6% CGST (12% cumulative) is subject to the condition 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.
Further, there is no restriction on the GTA from taking ITC if this option is availed.
Thus, where the GTA is not eligible to take ITC for the supplies effected by it and the liability under GST is discharged under reverse charge basis, the recipient of GTA service discharging the tax liability is entitled to take Input Tax Credit (ITC) of the amount of tax paid under reverse charge, provided it is used in the course or furtherance of business at his end. Further the recipient would be eligible for ITC of the GST paid by GTA on forward charge basis.
Notification no. 11/2017-Central Tax (Rate), sr.no.11, (ii) also provides that supporting services in transport other than those mentioned in (i) (Heading 9967) would attracts @9% CGST. Identical rate would be applicable for SGST also, taking the effective rate to 18%. Similar rate has been prescribed for services falling under heading 9965 in terms of notification no. 11/2017-Central Tax (Rate), sr.no. 9 (v).
The following services provided by a GTA (Heading 9965 or 9967) is exempt from payment of tax:
(S.No 21) Services provided by a goods transport agency, by way of transport in a goods carriage of:
1. agricultural produce;
2. 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;
3. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
4. milk, salt and food grain including flour, pulses and rice;
5. organic manure;
6. newspaper or magazines registered with the Registrar of Newspapers;
7. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
8. defence or military equipments.
(Sr. No 21A) Services provided by a GTA to an unregistered person, including an unregistered casual taxable person, other than the following recipients, namely :-
1. any factory registered under/governed by the factories Act, 1948; or
2. any society registered under the societies registration act,1860 or under any other law for the time being in force in any part of India; or
3. any co-operative society established by or under any law for the time being in force; or
4. any body corporate established , by or under any law for the time being in force; or
5. any partnership firm whether registered or not under any law including association of persons;
6. 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.
(Sr no 21B)Services provided by a goods transport agency, by way of transport of goods in a goods carriage, to-
1. Department or Establishment of the central/state Govt./Union Territory; or
2. Local authority ; or
3. Governmental agencies,
Which has taken GST registration only for the purpose of deducting Tax under section 51 (GST-TDS) and not for making a taxable supply of goods or services.
(Effective from 01.01.2019)
In respect of those who provide agency services in transport, the liability is cast on the recipients in most of the cases or unless option to pay under forward charge has been exercised by the GTA.
Complied By- CA Vijay Sah, B.Com(H), ACA, Member of ICAI.