Commercial Vehicle given on hire for transportation of goods
Query (Issue) Started By: – Kaustubh Karandikar Dated:- 12-1-2019 Last Reply Date:- 9-1-2020 Goods and Services Tax – GST
Got 12 Replies
GST
XYZ (Manufacturer) have a commercial vehicle for transportation of goods and wants to provide the vehicle on hire to PQR(Manufacturer) for the transportation of Goods and for which there will be a monthly billing on the basis of number of trips and locations where the goods have been transported. Both are in the same state.
1) What will be Rate of GST to be charged on the Invoice by XYZ to PQR? And
2) The nature of Service (Whether this can be treated as GTA service or not?).
Reply By KASTURI SETHI:
The Reply:
Dear Sir,
Query-wise reply is as under:-
1. HSN 996601. Hiring truck exempted vide Notification No.12/17-CT(Rate) dated 28.6.17 as amended vide Notification No. 2/18-CT(Rate) dated 25.1.18.
2. It cannot be treated as GTA.
Reply By Kaustubh Karandikar:
The Reply
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
on hire –
(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
Nil
Nil
(b) to a goods transport agency, a means of transportation of goods.
Notification No.9/17-IT(R) dated 20.6.17
23
Heading 9966 or Heading 9973
Services by way of giving on hire –
(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
(b) to a goods transport agency, a means of transportation of goods.
Nil
Nil
Notification No.8/17-IT(Rate) dated 20.6.17 (Serial No.10) does not contain the word,"Hiring". So it is not relevant. You are talking of hiring and not renting.
Reply By MSM ASSOCIATES:
The Reply:
Mr. Kasturi Shethi, w.r.t above query i have a further doubt :-
Since the term "Hire" is not defined under GST act, what shall be the meaning of "Hire basis"?
Case 1) ABC Ltd gives on hire to XYZ Ltd, 10 trucks on a fixed hire Charges of ₹ 50000 per truck per month for t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Vehicle ? Even then I am expressing views as under :
1. Difference between 'Hiring' and 'Renting.
As per the Law Lexicon, the Encyclopaedic Law Dictionary, when A person gives motor vehicle to B person, A is providing renting service of motor vehicle (may be car, truck, van, metadoor, tipper etc.) and B is hiring that motor vehicle from A. .
2. Exemption on 'hiring basis' of vehicle meant for transportation of goods is available to GTA only,. if truck is supplied to GTA only. It is clearly mentioned at serial no. 22 of Notification no. 12/17-CT(R) dated 28.6.17 as amended. (extract of notification already given above. If truck is supplied to the person other than GTA, no exemption is available. In that situation, the activity of hiring and renting both are covered under the category of 'Renting of Motor Vehicle' e.g. we hire cab (Uber Co.) and Uber Co. provides renting service.
3. In the cases No.1 and 2 mentioned by you, if XYZ Ltd. is registered under
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
effective control is the person who has rented the truck.
This are my views,
Thanks
Reply By KASTURI SETHI:
The Reply:
Yes. This is also an other aspect opined by Sh.Alkesh Jani Ji.
Reply By KASTURI SETHI:
The Reply:
The category of "Right to use of tangible goods services" does not include trucks (means of transportation of goods by road). It includes machinery, equipments, excavators, cranes, wheel loaders etc..See HSN 9973
Reply By Alkesh Jani:
The Reply:
Dear Shri Kasturiji Sir,
I was trying to simplify the term "Hiring" and "Renting", where effective control or right to enjoy without transferring the title.
Further, In GST "Goods" has been defined at Section 2(52) of CGST Act,2017 and is reproduced below for ready reference
"(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
renting of machinery, equipments etc. only. It does not talk of hiring of motor vehicles.
What I want to say is that hiring of truck by GTA from an other person is exempted. Govt.does not want to burden GTA because GTA will pay tax. Hiring charges (without GST) will also form part of transportation charges/cost which will be recovered from the person who bears the freight (may be consignor or consignee). It is like the inclusion of cost of captively consumed goods in the manufacture of final product. (just for comparison) If truck is given to a person other than GTA, it will be considered under the category of "Renting of Motor Vehicles" and tax will be charged accordingly.
Now if we classify truck (means of transportation of goods) under the category of "Right to Use of Tangible Goods Services" without transfer of possession and effective control as opined by you, even then exemption will not be available. Motor Vehicle was not included in this category even
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =