RCM applicability on Cotton Freight
Query (Issue) Started By: – Balakrishnan Ramalingam Dated:- 13-3-2019 Last Reply Date:- 30-8-2019 Goods and Services Tax – GST
Got 5 Replies
GST
My clients Spinning Mills are paying Lorry Freight payment for purchase of Cotton – Inter State. Please clarify whether RCM is applicable under GTA for the above Lorry Freight Payment?
Reply By Rajagopalan Ranganathan:
The Reply:
Sir,
You have to pay GST on freight under reverse charge if you procure cotton from agriculturist vide Sl. No. 4A of Notification No. 4/2017-Central tax (Rate) dated 28..6.2017 as amended.
Reply By Balakrishnan Ramalingam:
The Reply:
Sir,
I am refering about Freight on Cotton purchase (GTA) and not cotton per se. The a
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gal requirement as GTA but at the same time non-issuance of consignment note cannot be adopted as modus operandi.
(2) If any agricultural produce is subjected to process (by cultivator or producer) which alters the basic character of the same, that would fall out of definition of agriculture produce. For example : jaggery, Sugar etc.In this scenario and GST is applicable.
(3) if we treat cotton as agricultural produce, no GST is applicable under RCM. It is exempted vide serial No.21 of Notification No.12/17-CT(Rate) dated 28.6.17 as amended.
(4). In my view, raw cotton is agricultural produce and cotton is not agricultural produce inasmuch as Raw cotton is subjected to various processes before being converted into cotton through machine
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