Transportation is the backbone of economy. Any hitch in transportation can disrupt the entire supply chain. Here, we would like to focus on the GST applicability on the transportation of goods by road as simply as possible.
Transporter can be of two types:
Mere transportation of goods by road, unless it is a service rendered by GTA, is exempt from GST vide Sl no 18 of Notification No: 12/2017-Central Tax (Rate), dated 28.06.2017. The law recognises that pure transportation of goods services are mostly provided by persons in the unorganised sector (by Individual truck/tempo operators who do not issue any consignment note) and hence has specifically excluded such operators from the tax net.
Under GST laws, the definition of Goods Transport Agency is provided in clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017.
(ze) “goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called;
Thus, it can be seen that issuance of a consignment note is the sine-qua-non for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency. If a consignment note is issued, it indicates that the lien on the goods has been transferred (to the transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee. Thus, it is only the services of such GTA, who assumes agency functions, that is being brought into the GST net.
Services by way of giving on hire
As per Sl.no. 22 of notification no.12/2017- Central Tax (Rate) dated 28.06.2017, Services by way of giving on hire to a GTA, a means of transportation of goods is exempt. Thus, if the GTA service supplier hires any means of transport to provide his output service, no GST is payable on such inputs.
In a nutshell, the GST law continues the provisions prevailing under the Service Tax regime. The law recognises that pure transportation of goods services are mostly provided by persons in the unorganised sector and hence has specifically excluded such operators from the tax net. 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.