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-

  1. agricultural produce
  2. milk, salt and food grain including flour, pulses and rice
  3. organic manure
  4. newspaper or magazines registered with the Registrar of Newspapers
  5. relief materials meant for victims of natural or man-made disasters
  6. defence or military equipment
  7. goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than Rs. 1,500
  8. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750.

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) :-

  1. Factory registered under the Factories Act,1948
  2. A society registered under the Societies Registration Act, 1860 or under any other law
  3. A co-operative society established under any law
  4. A person registered under GST
  5. A body corporate established by or under any law; or
  6. A partnership firm whether registered or not (including AOP)
  7. Casual taxable person

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

  1. GTA can opt for 12% GST with ITC or
  2. 5% GST with no ITC.

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 cavinodchaurasia@gmail.com , 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.

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5 responses to “Place of supply for GTA under GST”

  1. Tarun Mangla says:

    I am transportation bussiness, a owe a partnership firm &registered under GST , Our One Customer says ,we will pay the GST itself, but our second customer told that charge the gst on the bill, my question is that we will charge the gst to that
    inclusively this customer or not

  2. Namann says:

    A being GTA , is not registered under GST Act , and is providing service for transportation of goods from agra to delhi , so is it necessary for the GTA to take the registration ?

  3. ca piyush lalwani says:

    If gst is not registered and its place of busines is gujrat ad he supply goods to registered receiver in maharashtra.whether cgst/sgst or igst is to be charged???

  4. Heet says:

    HI vinod,

    In case we are C&f paying transportation charges to transporter on behalf of a XYZ Co.Are we liable to pay GST under RCM. The bill is raised by transporter on XYZ CO. However the payment is made by C&F in behalf of XYZ Co.

  5. Deepak says:

    So useful.

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