Introduction: This article discusses in detail about GT place of supply GTA and nature of its taxability under GST.
Query 1: ‘A’, a buyer registered in Andhra Pradesh receives GTA services from VRL Logistics which is registered in Telangana by way of Transportation of Goods from ‘B’ who is a registered Dealer in Tamil Nadu. In this Case how the GST is paid under Reverse Charge Mechanism.
Query 2: If transporter is registered & he do not charges GST than is it duty of consignee pay GST & get input credit of GST. And, if transporter is not registered & he sends goods from Delhi to Agra & no GST is charged, now is it duty of consignee to pay GST. Please advise the whether IGST or CGST/SGST is to be deposited?
Ans: 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.
So, individual truck owners who do not book cargo and issue consignment note in normal course of business are, not GTA and accordingly, services provided by them are not liable to service tax.
GST will not apply on transport of following goods by a goods transport agency-
Is a GTA liable to register?
As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is only engaged in making supplies of taxable goods/services, where the total tax on which is liable to be paid on reverse charge basis by the recipient as the category of persons exempted from obtaining registration under GST.
Thus, a GTA does not have to register under GST if he is exclusively transporting goods even if the turnover exceeds 20 lakhs as the total tax is required to be paid by the recipient under reverse charge basis.
Reverse Charge in case of GTA
Normally a service provider is required to pay taxes, but in case a GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge (notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) :-
Who will pay under Reverse Charge Basis?
As per Notification No. 13/2017- Central Tax dated 28/06/2017, the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage & located in the taxable territory shall be treated as the receiver of service.
What if, the payment is made by sender?
If the supplier of goods (consignor) pays the GTA, then the sender will be treated as the recipient & he will pay GST on reverse charge basis.
What if, the payment is made by receiver?
If the liability of freight payment lies with the receiver (Consignee), then the receiver of goods will be treated as a receiver of transportation services & will pay GST on reverse charge basis.
Situations showing who is liable to pay GST in case of a GTA services
|GTA service Provider||Supplier / Consignor||Receiver / Consignee||Person liable to pay freight||Person liable to pay GST|
|GTA||Company “A” (whether registered or not under GST)||Company “B” (whether registered or not under GST)||Company “A”||Company “A”|
|GTA||Company “A” (whether registered or not under GST)||Company “B” (whether registered or not under GST)||Company “B”||Company “B”|
|GTA||A Company (whether registered or not under GST)||Partnership firm (whether registered or not under GST)||Company||Company|
|GTA||Partnership firm / Co-op Society (whether registered or not under GST)||Registered Dealer||Dealer||Dealer|
|GTA||Partnership firm / Co-op Society (whether registered or not under GST)||Registered Dealer||Firm / Co-op Society||Firm / Co-op Society
|GTA||Unregistered Individual “A”||Registered Dealer||Registered Dealer||Registered Dealer|
|GTA||Unregistered Individual “A”||Registered Dealer||Unregistered Individual “A”||GTA (If GTA is registered)|
|GTA||Unregistered Individual “A”||Unregistered Individual “B”||Unregistered Individual “B”||GTA (If GTA is registered)|
Rate of Tax
However, the GTA has to give an option at the beginning of financial year.
Input Tax credit for the recipient of GTA services
In case of reverse charge, the person responsible for paying tax is the service recipient who is not supplying the GTA service so the concern of using any inputs to supply GTA service does not arise in his case.
He is liable to pay GST only because of RCM.
So GST paid on GTA under RCM can be availed as ITC by the person paying the tax
Place of Supply
As per section 12(8) of IGST Act 2017, 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.
So in the given query,
The place of GTA supplier is “ Telengana” &
The place of supply is “Andhra Pradesh” being the location of registered recipient.
Accordingly, IGST shall be paid by the registered recipient on such transaction.
The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at firstname.lastname@example.org , Mob. +91 9953587496.
Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.