Any person who provides service in relation to* transport of goods by road and issues consignment note, by whatever name called falls within the ambit of Goods Transportation Agency.
A point to be noted here is that every person providing service in relation to transport of goods by road is not a GTA unless he also issues a consignment note.
Individual truck or tempo operators who do not issue consignment note do not come under the ambit of GTA. The services provided by them are exempt under the head transportation of goods by road (intra-state) as per the GST Laws.
However, as decided in KM TRANS LOGISTICS PRIVATE LIMITED case law dated 20th November 2019 (AAR Ruling) the nature of activity carried out is of importance and along with it if the lien of the goods is transferred and the person becomes responsible for the goods till its safe delivery to the consignee then it shall be treated as GTA services. Thus, the mere issuance of or non-issuance of consignment note does not make them entitled for exemption from payment of GST.
Significance Of The Term In ‘In Relation To’ In The Definition
The term in relation to in the definition has widened the scope and includes not only the actual transportation of goods but also includes various intermediary and ancillary services. The intermediary and ancillary services which are provided in the course of transport of goods by road are as below mentioned:
- Loading & Unloading
- Packing & Unpacking
- Transhipment & temporary warehousing
These services are not independent but ancillary to the principal supply of goods in a goods carriage.
If their value is included in the invoice issued by such GTA then it will form part of GTA service as a composite supply.
If the GTA provides ancillary services as a separate supply and charges separately for such services on the same or separate invoice then it will be treated as a separate supply and it cannot be treated as a composite supply.
The document issued by a goods transportation agency for the purpose of transporting the goods by road in a goods carriage against the receipt of goods. The issue of consignment note means that the lien on the goods has been transferred to the transporter and the transporter becomes responsible for the goods until its safe delivery to the consignee.
A consignment note is serially numbered and contains
- 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 place of destination
- Gross weight of the consignment
- GSTIN of the person liable for paying tax whether consigner, consignee or GTA.
- Other particulars as prescribed for a tax invoice.
SUPPLY TO SPECIFIED RECIPIENTS
Case 1 – GST at 5%
When GTA charges tax at the rate of 5% to specified persons (recipients), the supply of service is taxable under reverse charge basis and the recipient is liable to pay tax.
In this case the GTA is not allowed to take Input Tax Credit (ITC) on the goods and services used in supplying such GTA services.
In other words, a GTA can charge tax at the rate of 5% only when he has not availed Input Tax Credit (ITC) on the goods and services used in supplying such GTA services.
The recipient of such service has no restrictions on the availment of ITC except the specified provisions on ITC under the CGST Act, 2017.
Case 2 – GST at 12%
When GTA charges tax at the rate of 12% to specified persons (recipients), the supply of service is taxable under forwarding charge basis and the GTA is liable to pay tax.
In this case, there are no restrictions on the availment of ITC except the specified provisions on ITC under the CGST Act, 2017 for both the GTA supplier as well as the recipient of such services.
SUPPLY TO PERSONS OTHER THAN SPECIFIED RECIPIENTS
CASE 1: NO GST
When GTA supplies services to recipients other than the specified recipients i.e. to an unregistered individual end consumer, the supply is wholly exempt from the levy of GST as per Notification No. 32/2017- Central Tax (Rate) dated 13th October 2017.
LIST OF SPECIFIED RECIPIENTS
- Factory registered under the Factories Act,1948*
- A society registered under the Societies Registration Act, 1860 or under any other law*
- A co-operative society established under any law*
- A GST registered person**
- A body corporate established by or under any law*
- A partnership firm whether registered or not (including AOP) *
- Casual taxable person**
All the above-mentioned persons shall have to compulsorily register under GST irrespective of their turnover as they are liable to pay tax on reverse charge basis.
*GTA services provided to these recipients are always taxable whether they are registered or not registered.
**GTA services provided to these recipients are taxable only when they are registered and exempt from tax when they are not registered.
RECIPIENT IN CASE OF GTA SERVICES
The person who pays or is liable to pay freight for transportation of goods by road in goods carriage, located in the taxable territory shall be treated as recipient in case of GTA supplies.
In other words, the recipient of the goods can be a consignor, consignee or GTA depending on who has made/or liable to make the payment of freight.
REGISTRATION FOR GTA
As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person is exempted from obtaining registration under GST, if the person is engaged exclusively in making taxable supplies of goods/services on which tax is payable under reverse charge basis.
Thus, a person who is engaged in taxable supplies of goods or services which are taxable under reverse charge basis only and no other supplies he is exempt from obtaining registration irrespective of the turnover thresholds prescribed under the GST laws.
In other words, 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 the threshold limit prescribed under the GST laws.
PLACE OF SUPPLY FOR GTA
Section 12(8) of the CGST 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.
Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods
SERVICES BY GTA EXEMPTED FROM GST LIABILITY
The following services provided by GTA 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 Rs. 1,500
(c) Goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750
(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 mishaps
(h) Defence or military equipment
Services provided by a GTA to:
1. An unregistered person (other than the specified recipients)
2. An unregistered casual taxable person
Services provided by a GTA, by way of transport of goods in a goods carriage to:
1. A department or establishment of Central Government or State Government or Union Territory or
2. Local Authority
3. Governmental Agencies, which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.
SERVICES TO GTA EXEMPTED FROM GST LIABILITY
Services by way of giving on hire to a goods transport agency a means of transportation of goods.
Goods carriage means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.
The article is based on the author’s interpretation of the GST laws taking into consideration various notifications, circulars and updates issued from time to time and shall always be read along with the relevant legal documents.
Notification No. 12/2017 – Central Tax (Rate) dated 28th June, 2017
Notification No. 13/2017 – Central Tax (Rate) dated 28th June, 2017
Notification No. 32/2017- Central Tax (Rate) dated 13th October 2017
Notification No. 5/2017- Central Tax dated 19/06/2017
Relevant Section of the CGST Act, 2017
Section 9 of the CGST Act, 2017
Section 12 of the CGST Act, 2017