Return Journey Income – Co using own lorry for supply and receives Income for return load – GST applicable
Query (Issue) Started By: – Balakrishnan Ramalingam Dated:- 13-3-2019 Last Reply Date:- 14-3-2019 Goods and Services Tax – GST
Got 4 Replies
GST
Sirs,
My clients use their own lorry for supply of their products to customers. While the lorries returning to factory they also carry some goods of third parties and enjoy some freight income. No consignment note is issued. Neither they are GTA. Please advise, whether GST should be collected or paid of such Return Journey Income.
Thanks
Reply By Rajagopalan Ranganathan:
The Reply:
Sir,
Since you are not issuing consignment note you are not providing GTA Service. hence you need not pay GST on some freight income enjoyed by you vide Sl. No. 18 of Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 as amended.
Reply By KASTURI SETHI:
The Reply:
Goods Transport Agency in GST
C.B.E. & C. Flyer No. 38, dated 1-1-20
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ept services of GTA) continue to be exempt even under the GST regime. In so far as the services of GTA is concerned, if the services (of Goods Transportation) are provided (by the GTA) to specified classes of persons, the tax liability falls on such recipients under the reverse charge mechanism. The following discussion will clarify the position.
Transportation of Goods by Road
In terms of Notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 (sr. no. 18), the following services are exempt from GST.
Services byway of transportation of goods (Heading 9965) –
(a) by road except the services of –
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
Thus, it is to be seen that mere transportation of goods by road, unless it is a service rendered by a goods transportation agency, is exempt from GST.
Who is a GTA – Goods Transport Agency?
As per Section 65B(26) of the Finance Act, 1994; “Goods Transport Agency means any person who provides servi
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erred (to the transporter) and the transporter becomes responsible for the goods till its safe delivery to the consignee. It is only the services of such GTA, who assumes agency functions, that is being brought into the GST net. Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA. As a corollary, the services provided by such individual transporters who do not issue a consignment note will be covered by the entry at s. no. 18 of notification no. 12/2017-Central Tax (Rate), which is exempt from GST.
What is a consignment note?
Consignment Note is neither defined in the Act nor in the notification no. 12/2017-Central Tax (Rate). Guidance can be taken from the meaning ascribed to the term under the Explanation to Rule 4B of Service Tax Rules, 1994. In terms of the said rule, consignment note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road
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rvice has not been taken. The Explanation to the notification further clarifies that it shall mean that, – (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.
GST @ 6% CGST (12% cumulative) is subject to the condition that the goods transport agency opting to pay central tax @ 6% under this entry shall, thenceforth, be liable to pay central tax @ 6% on all the services of GTA supplied by it. Further, there is no restriction on the GTA from taking ITC if this option is availed.
Thus, where the GTA is not eligible to take ITC for the supplies effected by it and the
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%, in respect of transportation of goods by road (in terms of notification no. 13/2017-Central Tax (Rate), dated 28-6-2017 (sr. no. 1) as amended by notification no. 22/2017-Central Tax (Rate), dated 22-8-2017, if the recipients (located in the taxable territory) belong to the following category :
(a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons; or
(g) any ca
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rged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
(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 manmade disasters, calamities, accidents or mishap; or
(h) defense or military equipments.
Similarly, the following services received by the GTA (Heading 9966 or 9973) is also exempt in terms of notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 (sr. no. 22)
Services by way of giving on hire –
………………..
(b) to a goods transport agency, a means of transportation of goods.
Thus, if the GTA hires a means of transportation of goods, no GST is payable on such transactions.
Significance of the term 'in relation to' in the definition of GTA
The use of the phrase 'in relation to' has extended the scope of the defini
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+ 6% SGST). In all other cases where GTA service is availed by persons other than those specified, the GTA service supplier is the person liable to pay GST. The GTA service supplier is not entitled to take ITC on input services availed by him if tax is being charged @ 5% (2.5% CGST + 2.5% SGST). In case the GTA service supplier hires any means of transport to provide his output service, no GST is payable on such inputs.
In a nutshell, the GST law continues the provisions prevailing under the Service Tax regime. The law recognises that pure transportation of goods services are mostly provided by persons in the unorganised sector and hence has specifically excluded such operators from the tax net. In respect of those who provide agency services in transport, the liability is cast on the recipients in most of the cases or unless option to pay under forward charge has been exercised by the GTA.
Reply By Balakrishnan Ramalingam:
The Reply:
Thanks for the replies.
My view on the subject
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