Impact of GST on Goods Transport Agency

Highlights of Article

All Transport services by road are exempt from GST except services from GTA and Courier agency.

Anyone who provides consignment note for goods delivery will be treated as GTA.

Mere Bill is not a consignment note.

5% GST rate is applicable for transportation service by GTA on RCM basis means GST is payable by recipient. (NO ITC to transporter).

12% GST rate on forward charge basis (ITC is available to transporter).

 

Services provided by GTA to unregistered person is exempt except if he adopts to pay GST on forward charge basis.

Services provided by GTA for agriculture product is exempt.

If consideration charged for single consignment is less than 1500 RS. than service from GTA is exempt.

If multiple consignment carried by transporter and consideration for single consignee not exceeds 750 RS. than service from GTA is exempt.

Background of levying tax on the services of Goods Transport Agency

The levy of Service Tax on Road Transportation Service has always been a contentious issue. The Finance Act, 1997 had levied Service Tax on Goods Transport Operators w.e.f. 16-11- 1997 which was subsequently withdrawn after nation-wide strike. Thereafter by the Finance (No. 2) Act, 2004 Service Tax was imposed on Transport of Goods by Road service rendered by a goods transport agency with effect from 10-09-2004. However, the levy was deferred until further notice again in view of transporters’ strike. The Government thereafter constituted a Committee to deal with the issue and after taking into account the recommendations of the Committee, Notification Nos. 32 to 35/2004 – ST all dated 03- 12-2004 were issued, levying tax on Transport of Goods by Road with effect from 01-01-2005.

The legal position prevailing under Service Tax is being continued under the GST regime. The services of transportation of goods by road (except services of GTA) continue to be exempt even under the GST regime. In so far as the services of GTA is concerned, if the services (of Goods Transportation) are provided (by the GTA) to specified classes of persons, the tax liability falls on such recipients under the reverse charge mechanism. The following discussion will clarify the position.

Transportation of goods by road are done by transporter or courier agency. Here, we are discussing transporter. Transporter can be of two types:

1. Goods Transport Agency (GTA) – like VRL Logistic or TCI XPS

2. Transport (i.e. Vehicle) Owners

The real difference between GTA and Transport Owners, GTA are not fleet owners. They provide service of transportation by using the fleet of others.

Why we are trying to differentiate GTA & Transport Owners?

Because of the following exemption – ‘Notification 12-2017 dated 28 June 2017 Paragraph 1 Serial No. 18 – Service by way of transportation of goods by road except the services of Goods Transport Agency and courier agency.’

However, law has mischief by defining the GTA as ‘Notification 12-2017 dated 28 June 2017 Paragraph 2 Clause (ze) – any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called’, because consignment note is even issued by transport owners.

As per Rule of Interpretation of Tax Statutes given by Hon’ble Courts, whenever law has mischief, to suppress such mischief one can refer the speech of mover given on the floor of Parliament.

Finance Minister Shri P. Chidambaram, in his Budget Speech on 8-7-2004 (Para 149) has stated as follows:

149. 58 services have been brought under the net so far. I propose to add some more this year. These are business exhibition services; airport services; services provided by transport booking agents; transport of goods by air; survey and exploration services; opinion poll services; intellectual property services other than copy right; brokers of forward contracts; pandal and shamiana contractors; outdoor caterers; independent TV/radio programme producers; construction services in respect of commercial or industrial constructions; and life insurance services to the extent of the risk premium. I may clarify that there is no intention to levy service tax on truck owners or truck operators. Nor, as was clarified by my predecessor, is there any intention to levy service tax on the savings part of the premium collected by an insurer.

It is clear from the above speech, the tax was imposed only on goods transport agency and not on transport owners. The same view has been upheld by the Tribunal in C.C.E. & C. GUNTUR VERSUS KANAKA DURGA AGRO OIL PRODUCTS PVT. LTD. [2009 (15) S.T.R. 399 (Tri. – Bang.)] where-in the Tribunal held that Transport booking agents alone contended as covered under Goods Transport Agency service and Service tax paid for engaging services of individual truck operators liable to be refunded.

The definition and taxability of transportation of goods in GST are identical to as it was in 2005 (Positive Regime of Taxation in Service Tax) and 2012 (Negative Regime of Taxation in Service Tax). Also, the current Finance Minister Mr. Arun Jaitley while deciding the rate and exemption on services on 19 May 2017 at the GST Council Meeting have said that they are following grandfather approach in deciding taxability of services in GST regime.

By going through the definition of GTA, it can be seen that issuance of a consignment note is the sinequa-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. Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA. As a corollary, the services provided by such individual transporters who do not issue a consignment note will be covered by the entry at S.no.18 of Notification 12-2017 dated 28 June 2017, which is exempt from GST.

Who is a GTA – Goods Transport Agency?

As per Section 65B (26) of the Finance Act, 1994; “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”. Therefore, in the Service Tax regime, issuance of Consignment Note (C/N) was integral and mandatory requirement before any road transporter could be brought within the ambit of GTA.

Courier Agency –

“Courier agency” means any person engaged in the door-to door transportation of time-sensitive documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.

Transportation of Goods by Road

In terms of Notification 12-2017 dated 28 June 2017 (sr.no.18), the following services are exempt from GST Services by way of transportation of goods (Heading 9965):

(a) by road except the services 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.

Position under GST

Under GST laws, the definition of Goods Transport Agency is provided in clause (ze) of Notification 12-2017 dated 28 June 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.

It is only the services of such GTA, who assumes agency functions, that is being brought into the GST net. Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA. As a corollary, the services provided by such individual transporters who do not issue a consignment note will be covered by the entry at s.no.18 of Notification 12-2017 dated 28 June 2017, which is exempt from GST.

What is a consignment note?

Consignment Note is neither defined in the Act nor in the Notification 12-2017 dated 28 June 2017. Guidance can be taken from the meaning ascribed to the term under the Explanation to Rule 4B of Service Tax Rules, 1994. In terms of the said rule, 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.

Mere bill is not consignment note –

In Nandganj Sihori Sugar Co. v. CCE (2014) 46 GST 570, it was held that consignment note issued by GTA represents its liability to –

• transport consignment handed over to it to destination
• undertake delivery of same to consignee and
• temporarily store till delivery.

Mere bill issued for transportation of goods cannot be treated as a Consignment Note.

Consignment Note Should Contain the following:

• It Should be serially numbered.
• It Should contain the name of the consignor and consignee.
• Registration No of the Goods carriage in which goods are transported.
• Details of the Goods sent.
• Place of origin and place of Destination.
• Person Liable to pay GST.

Service provided by person who does not issue or not liable to issue  consignment note is not taxable

 If driver of goods carriage is self-employed either by taking vehicle on rent from other or as owner of one or two vehicles, he does not issue any consignment note. He has direct contract with consignor/consignee. He himself receives freight from consignor/consignee. He would not be liable to GST. Only GTA which issues a consignment note is liable to GST tax.

As discussed on Page no. 3 above Truck owners are not covered under GST and Following Documents are to be collected from them:

1. Blue Book

2. PAN CARD

3. Declaration under Section 44AE of Income tax act states that small business engaged in the business of plying, hiring or leasing goods carriages having not more than ten goods carriage vehicles, can adopt the Presumptive taxation scheme for ascertaining the taxable income for a particular financial year.

Rate of GST on Multimodal Transport Services

• The GST Council in its 21st meeting had recommended GST rate of 12% with full ITC under forward charge for composite supply of multimodal transportation.
• Towards this end notification no.13/2018-Central Tax dated 26.07.2018 issued.
• Multimodal Transport of goods charged to tax @ 6% under CGST. Total 12%
• Entry no.9(vi) substituted as under:
• “(vi) Multimodal transportation of goods charged @ 6%
• Explanation. –
• (a) “multimodal transportation” means carriage of goods, by at least two different modes of transport from the place of acceptance of goods to the place of delivery of goods by a multimodal transporter;
• (b) “mode of transport” means carriage of goods by road, air, rail, inland waterways or sea;
• (c) “multimodal transporter” means a person who, –
• (A) enters into a contract under which he undertakes to perform multimodal transportation against freight; and
• (B) acts as principal, and not as an agent either of the consignor, or consignee or of the carrier participating in the multimodal transportation and who assumes responsibility for the performance of the said contract.

Is a GTA liable to register?

There was a lot of confusions whether a GTA has to register under GST. 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).

Is Composition Scheme available for Transportation?

As per Section 10(2) of CGST Act, 2017, ‘The composition scheme in case of the service provider is available only in case of Restaurant or catering service’. Therefore, the composition is not available for goods transport agency.

What Accounts & Records needs to maintained by GTA?

As per Section 35(2), every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee and other relevant details of the goods in such manner as may be prescribed. If a Transporter is not registered, then he shall submit the details regarding his business electronically on the common portal in FORM GST ENR-01 and upon validation of the details furnished, a unique enrolment number shall be generated and communicated to the said person. Any person engaged in the business of transporting goods shall maintain records of goods transported, delivered and goods stored in transit by him along with the GSTIN of the registered consigner and consignee for each of his branches.

Detention, Seizure and Release of Goods and Conveyances in Transit

As per Section 129(1) of CGST Act, 2017 “Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made there under, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released on payment of applicable tax and penalty.

Charge of GST on services provided by GTA

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) dated 28.06.2017, sr.no.11, (ii) also provides that supporting services in transport other than those mentioned in (i) (Heading 9967) would attract GST @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) dated 28.06.2017, sr.no. 9 (v).

Note: Once the transporter chooses to charge tax @ 12%, he is not allowed to charge tax @ 5% for future supplies.

Person Liable to Pay GST on GTA services

The liability to pay GST devolves on the recipients for supply of services by a goods transport agency (GTA)who has not paid central tax at the rate of 6%, in respect of transportation of goods by road (in terms of notification no. 13/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.1) as amended by notification no. 22/2017-Central Tax (Rate) dated 22.08.2017, if the recipients (located in the taxable territory) belong to the following category:

(a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) 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

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person.

Thus in cases where services of GTA are availed by the above categories of persons in the taxable territory the GTA supplier has the option to pay tax (and avail ITC) @12% (6% CGST + 6% SGST); and if the GTA does not avail this option, the liability to pay GST will fall on the recipients. In all other cases where the recipients do not fall in the categories mentioned above, the liability will be on the supplier of GTA services

How to determine Place of Supply for a GTA

The place of supply of services by way of transportation of goods, including by mail or courier to––

(a) a registered person, shall be the location of such person

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

Examples for determining place of supply

Rajesh is a registered dealer in Bangalore. He hires a GTA to deliver goods to Mumbai. Place of supply will be Bangalore. Anita is unregistered dealer in Gujarat who hires a GTA to deliver goods to Rajasthan. Place of supply will be Gujarat where Anita hands over the goods to the transporter. Vikas is registered in both Mumbai and Bangalore. He hires a transporter (based in Mumbai) to deliver from Bangalore to Delhi. CGST & SGST will be applicable. If the transporter is based in Chennai, then IGST will be applicable. GST compliant invoice of a GTA must have following details-

• Name of the consignor and the consignee.
• Registration number of goods carriage in which the goods are transported.
• Details of goods transported.
• Gross weight of the consignment.
• Details of place of origin and destination.
• GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency.
• Name, address and GSTIN (if applicable) of the GTA.
• Tax invoice number (it must be generated consecutively and each tax invoice will have a unique number for that financial year).
• Date of issue.
• Description of service.
• Taxable value of supply.
• Applicable rate of GST (Rates of CGST, SGST, IGST, UTGST and cess clearly mentioned).
• Amount of tax (With breakup of amounts of CGST, SGST, IGST, UTGST and cess).
• Whether GST is payable on reverse charge basis.
• Signature of the supplier.

GTA services specifically exempt

In terms of Notification 12-2017 dated 28 June 2017, (sr.no.21), the following services provided by a GTA (Heading 9965 or 9967) is exempt from payment of tax:

Services provided by a goods transport agency, by way of transport in a goods carriage of:

(a) agricultural produce;

(b) 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;

(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;

(d) milk, salt and food grain including flour, pulses and rice;

(e) organic manure;

(f) newspaper or magazines registered with the Registrar of Newspapers;

(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(h) defence or military equipments.

Exemption to supply of services to transit cargo to Nepal and Bhutan

Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries) has been exempted. – Notification 12-2017 dated 28 June 2017, and No. 9/2017-IT (Rate) both dated 28-6-2017 as amended on 29-9-2017.

Exemption to service of giving vehicles on hire to GTA

Similarly, the following services received by the GTA (Heading 9966 or 9973) is also exempt in terms of Notification 12-2017 dated 28 June 2017, (sr.no.22)

Services by way of giving on hire:

(b) to a goods transport agency, a means of transportation of goods.

Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.

GST on outward freight charged in tax invoice in case of FOR contracts

In case of FOR basis contracts, the supplier arranges transport. In that case, he pays GST under reverse charge on outward freight. He then charges outward freight in the tax invoice. In such case, the outward freight charged is part of value of goods and GST is payable on value including outward freight. The rate is same as applicable to goods, as this is a composite supply as per section 2(30) of CGST Act. It is not correct to charge freight separately and charge GST @ 5% [2.5% plus 2.5%] as the service of supplier of goods is not Goods Transport Agency Service at all.

Significance of the term ‘in relation to’ in the definition of GTA

The use of the phrase ‘in relation to’ has extended the scope of the definition of GTA. It includes not only the actual transportation of goods, but any intermediate/ancillary service provided in relation to such transportation, like loading/unloading, packing/ unpacking, trans-shipment, temporary warehousing, etc. If these services are not provided as independent activities but are the means for successful provision of GTA Service, then they are also covered under GTA.

FAQs on GTA

Qs. Amar hired a GTA to transport his goods. The consideration charged was Rs. 1,200.  Will Amar pay GST? 

Ans. Ajay will not pay GST under RCM as the consideration for transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500.

Qs. Vinod hired a GTA to transport goods. The GTA was asked to come 2 days as Vinod would receive the goods in batches. The entire consideration was Rs. 600. Will Vinod pay GST?

Ans. Vinod will not pay GST because the consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750.

Qs. Mr. Ajay, a working professional, is moving houses and hires XYZ GTA to transport his household items. XYZ demands Ajay to pay GST under RCM as moving charges are Rs. 6,000. Ajay is confused. 

Ans. Ajay is unregistered and if XYZ GTA is also unregistered under GST then, GST is not applicable. If XYZ is registered, then it will pay GST of 5%. RCM will not apply on Ajay.

Qs. Anand, a garments shop owner in Kolkata, hires a truck to deliver goods from wholesaler to his (Anand’s) shop. Anand’s turnover is less than 20 lakhs and he has not registered under GST. The GTA demands that Anand should pay tax under RCM. Anand argues that since he is not registered, he does not have to pay any GST.

Ans. Only the persons above (Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) are required to pay GST under RCM. Unregistered dealers (Anand) purchasing goods/services from unregistered GTA do not have to pay GST under reverse charge mechanism. If the URD hires from  a registered GTA, then the registered GTA is liable to pay GST. So, Anand is not liable to pay GST under RCM.

 Qs. Anand now purchases garments from Assam and pays for a truck to deliver the goods to his shop in Kolkata. The GTA says that Anand has to register for GST as he is making an inter-state purchase as only registered dealers can have inter-state trade.

Ans. An unregistered person can make inter-state purchases. For making inter-state sales, he will have to be compulsorily registered. Since, Anand is an unregistered dealer and the GTA is also unregistered then the concept of RCM does not arise.

 Qs. The GTA is registered at Assam and its branch is collecting cash in Kolkata on his behalf. Recipient of service Anand is in Kolkata. If Anand was registered, would he have charged IGST or SGST/CGST under RCM?

Ans. If the original transporter in Assam bills Anand, then IGST should be charged. If he bills the branch then SGST/CGST will apply.

Qs. Anand has received a one-time contract to sell garments to a dealer in Mumbai. Anand hires a truck to send the goods.

Ans. Since, Anand is not registered under GST, he cannot make any inter-state sale. To make an inter-state sale, he must register as a casual taxable person. Then when he hires a truck to send the garments, automatically he is liable to pay GST under RCM.

Qs. Anand is sick of all this and decides to voluntarily register. He hires a truck again to transfer goods from the wholesaler to his shop. GTA asks him to pay GST on RCM as he is registered. But Anand’s view is that his turnover is still below 20 lakhs.

Ans. The threshold of turnover does not matter if a person is voluntarily registered. All provisions of GST Act will apply to a registered person. Anand is liable to pay GST under RCM.

Qs. Anand’s turnover has increased to 45 lakhs. He wants to shift to composition scheme as he sells mainly to end consumers. But he is worried as his GTA has told him they would not deliver his goods if he is registered under composition scheme as the GTA become liable for GST.

Ans. This is a myth. Even composition dealers are liable to pay GST under RCM. Anand will pay GST on RCM if he hires a GTA whether he is registered as a composition dealer or as a normal dealer.

FAQ: TRANSPORT & LOGISTICS

Question 1: I am a single truck owner-operator and I ply my truck mostly between States, carrying the goods booked for my truck by an agent; aggregate value of service which I provided exceeded twenty lakh rupees during last year. Am I supposed to take registration?

Answer: You are not liable to registration, as services provided by way of transportation of goods by road are exempt. Notification 12-2017 dated 28 June 2017, refers.

Question 2: I own a single truck and I rent it to a major player, who provides GTA service; should I take a registration? Does my monthly rental/lease income attract GST?

Answer: Registration is not required since services by way of giving on hire, a means of transportation of goods to a GTA are exempt from tax vide entry no. 22 of Notification 12-2017 dated 28 June 2017,

Question 3: In my truck, I only carry fruits and vegetables, in relation to whose transportation service GST is exempt; should I take registration?

Answer: Services by way of transportation of goods by road other than by a GTA or a courier agency are exempt from tax under entry no. 18 of Notification 12-2017 dated 28 June 2017, and thus you are not liable for registration.

Question 4: I am a truck supplier/broker. My job is to get orders for truck owners. I quote the rate for transportation to GTA on behalf of truck owners and I get a small amount as commission out of the truck hire fixed with the GTA. This brokerage is paid by the truck owners. As the services provided by way of transportation of goods by road are exempt from tax, am I liable to registration?

Answer: You are liable to registration if the aggregate amount of commission received by you in a financial year exceeds Rs. 20 lakhs (Rs. 10 lakhs in special category States except J & K).

Question 5: As a transporter, am I required to maintain any records of my services of transportation?

 Answer: Yes, in terms of section 35(2) of the CGST Act, 2017 you are required to maintain records of the consigner, consignee and other relevant details of the goods. Further, in terms of rule 56 of the CGST Rules, 2017 you are required to maintain records of goods transported, delivered and goods stored in transit by you along with the GSTIN of the registered consigner and consignee for each of your branches.

Question 6: Are intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, provided in relation to transportation of goods by road to be treated as part of the GTA service, being a composite supply, or these services are to be treated as separate supplies.

Answer: The GTA provides service to a person in relation to transportation of goods by road in a goods carriage, which is a composite service. The composite service may include various intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, which are provided in the course of transport of goods by road. These services are not provided as independent services but as ancillary to the principal service, namely, transportation of goods by road. The invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services. In view of this, if any intermediary and ancillary service is provided in relation to transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies. However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.

Question 7: As per Notification number 05/2017-Central Tax dated 19th June, 2017, the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under sub-section (3) of section 9 of the CGST Act, 2017 are exempted from obtaining registration under the said Act. Please clarify whether a GTA providing service in relation to transportation of goods by road under reverse charge mechanism (RCM) can avail of the benefit of this exemption.

Answer: Yes, a GTA providing service in relation to transportation of goods by road under RCM can avail of the benefit of this exemption.

Question 8: Can a GTA obtain registration for one vertical (Rail, Cargo, Renting, Warehousing etc.) for which tax needs to be paid while not obtaining registration for another vertical (GTA under RCM) on which there is no tax liability.

Answer: No, because the business entity is not engaged exclusively in the supply of services liable to tax under reverse charge mechanism.

Question 9: In transport industry, old vehicles, old tyres, scrap material etc, on which no input tax credit (ITC) has been taken, are disposed of after completion of their useful life. As a truck owner disposing of these goods, am I required to pay GST considering that no ITC has been taken at the time of their initial purchases? Would levy of tax in such cases not amount to double taxation, as tax has already been paid at the time of initial purchases?

Answer: Under section 7 of the CGST Act, 2017 supply includes all forms of supply of goods such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Sale or disposal of old vehicles, old tyres and scrap material for a consideration would therefore attract GST regardless of whether ITC has been availed or not.

Question 10: Please clarify whether input tax credit is available to the recipient of service, when the GST paid by him is at a concessional rate of 5% under RCM.

Answer: Yes, input tax credit is available in such cases.

Question 11: When a GTA hires a truck (with driver) from another GST registered entity for the purpose of providing goods transport service to a registered recipient, whether tax credit is available to the GTA on the GST paid by him to the owner of the truck registered under GST.

Answer: Services by way of giving on hire to a GTA, a means of transportation of goods are exempt from GST under Notification 12-2017 dated 28 June 2017, . When the tax is not payable, the question of taking any tax credit does not arise.

Question 12: In terms of section 12(9) of the IGST Act, 2017 the place of supply of passenger transportation service to a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey. In section 2 (3) of the IGST Act, 2017, the term “continuous journey” has been defined to mean a journey for which a single or more than one ticket or invoice is issued at the same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of service, and which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issued. Do all stopovers cause a break in continuous journey? Does the definition of “continuous journey” include instances whereby the stopover is for any period of time?

Answer: The term “stopover” has been explained in section 2(3) of the IGST Act, 2017 to mean a place where a passenger can disembark either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point of time. However, all stopovers do not cause a break in continuous journey. Thus a travel on Delhi-London-New York on a single ticket with a halt at London will be covered by the definition of continuous journey. However, the return journey of New York-London-Delhi will be treated as a separate journey and will be outside the scope of a continuous journey.

Question 13: How GST is to be charged on a multi-leg international journey, say Delhi-Dubai-Boston-Dubai-Delhi? Is GST chargeable for the entire journey and discharged at Delhi, or the GST is to be charged for Delhi-Dubai sector alone and discharged at Delhi, or GST is to be charged up to the farthest point of return, i.e. Delhi-Dubai-Boston at Delhi?

Answer: In this case if a single ticket or invoice has been issued for the Delhi-Dubai-Boston then it is a continuous journey even if there is a stopover at Dubai and the tax (CGST + SGST) would be charged at Delhi. The return journey of Boston-Dubai-Delhi would not be a continuous journey. The return journey not being a continuous journey and its place of supply being outside India, the said journey, would be liable to tax if the location of the supplier is in India.

Question 14: Is the electronic ticket receipt acceptable as a tax invoice for the purpose of GST? Is there any requirement for the Airlines to issue a proper tax invoice?

Answer: Yes, the electronic ticket in the global standard format (and without further modifications) is acceptable as a tax compliant invoice for GST purposes, regardless of the value of the transaction. Rule 54 (4) of the CGST Rules, 2017 refers. However, for B2B supplies, a tax invoice may be provided to enable the registered business customer to claim input tax credits.

Question 15: Is there any requirement for electronic ticket receipts issued to be signed or digitally signed for GST purposes?

Answer: No. In terms of Rule 54 (4) of the CGST Rules, 2017 in the case of passenger transportation service, a tax invoice shall include ticket in any form, whether or not serially numbered, and whether or not containing the address of the recipient of service but containing other information as mentioned under Rule 46 of the Rules ibid. As the electronic tickets issued by the Airlines are in the global standard format, such electronic ticket receipts are not required to be signed or digitally signed.

Question 16: Whether the Airlines are required to issue invoice to the customers transaction-wise, (i.e. Airway Bill-wise, Ticket Journey-wise) or a consolidated invoice, capturing the details of all individual invoices for a particular entity, can be issued on a monthly or fortnightly basis?

Answer: A single invoice incorporating the details of all the supplies for a particular entity can be issued subject to provisions of section 31 of the CGST Act, 2017. In such a case the ticket issued by the Airlines would not take the character of an invoice.

Question 17: Would GST be applicable on air travel undertaken on or after 1 st July 2017 on tickets issued prior to 1st July 2017 on which service tax was collected and discharged.

Answer: As service tax has already been collected and discharged by the Airlines on tickets issued prior to 1st July, 2017, there shall be no GST on such tickets even though the travel date is on or after 1 st July 2017.

Question 18: Does the GST treatment on fees for ancillary services in relation to air transport follow that of the underlying air transport service?

Answer: Yes, ancillary services are part of the service of transporting a passenger by air and do not constitute a separate supply of service. In this respect, ancillary services include services that are incidental to the transport of passengers by air (e.g., excess baggage charges, date change charges, un-accompanied minor fees, preferred seat charges, cancellation fees etc.). Consequently, ancillary services shall be treated within the same category of service as „transport of passengers by air‟ and shall attract the same rate of GST as applicable to the transport of passengers by air. Question 19: Will Airlines be entitled to input tax credits under the GST transitional rules if the liability to pay service tax arises, due to resolution of litigation or disputes, after implementation of GST? Answer: Yes, Section 142 6 (a) of the CGST Act, 2017 provides that every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of the existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of the existing law other than the provisions of section 11B (2) of the Central Excise Act, 1944. Note: Reference to CGST Act, 2017 / CGST Rules, 2017 includes reference to SGST Act, 2017 / SGST Rules, 2017 and UTGST Act, 2017 / UTGST Rules, 2017 also.

Conclusion

The above discussion shows that not all transport of goods by road is by a GTA. To qualify as services of GTA, the GTA should be necessarily issuing a consignment note. Only services provided by a GTA are taxable under GST. Services of transportation of goods by a person other than GTA are exempt. Moreover, in cases where the service of GTA is availed by the specified categories of persons in the taxable territory, the recipients who avail such services are the ones liable to pay GST and not the supplier of services unless the GTA opts for collecting and paying taxes @ 12% (6% CGST + 6% SGST). In all other cases where GTA service is availed by persons other than those specified, the GTA service supplier is the person liable to pay GST. The GTA service supplier is not entitled to take ITC on input services availed by him if tax is being charged @ 5% (2.5% CGST + 2.5% SGST). In case 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 recognizes that pure transportation of goods services are mostly provided by persons in the unorganized 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.