All Transport services by road are exempt from GST except services from Goods Transport Agency (GTA) and Courier agency.
Anyone who provides consignment note for goods delivery will be treated as GTA. Mere Bill is not a consignment note.
Applicability Of GST
Services by way of transportation of goods by road except the services of
(i) a goods transportation agency
(ii) a courier agency
are exempt from GST
– Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017,effective from 1-7-2017.
Thus, all transport of goods by road is exempt except in case of GTA and courier services.
Meaning of “Goods Transport Agency”
“Goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.
– para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Courier Agency
“Courier agency” means any person engaged in the door-to door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.
– para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Rate Of GST
The GST rate in case of service supplied by GTA on transportation of goods (including used household goods for personal use) is 5% (CGST 2.5% and SGST 2.5%) or IGST 5%.
ITC of input services or goods is not available to GTA – Notification No. 11/2017-CT (Rate) and No. 8/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Note that the condition of non-availment of ITC is applicable where GTA himself is liable to pay tax and not where the recipient is liable to pay GST under reverse charge.
Thus, once the recipient pays GST @ 5% (2.5% plus 2.5%) on reverse charge basis, he can avail its input tax credit.
Option to pay GST @ 12% underforward charge:
The GTA has option to pay GST @ 12% [6% plus 6%] under forward charge.
In that case, the GTA can avail Input Tax Credit. Since the GTA himself will be paying tax, the recipient is not liable to pay GST under reverse charge [amendment w.e.f. 22-8-2017].
GTA who are having their own vehicles and having huge Input Tax Credit on capital goods may find the option useful. This option may also be suitable for freight forwarders who are providing composite services of packing, clearing and transportation from source to destination basis.
Reverse charge in respect of GTA services
In case of services of Goods Transport Agency (GTA), the service recipient is liable in most of the cases, as per Notification No. 13/2017-CT (Rates) and 10/2017-IT (Rates) both dated 28-6-2017, effective from 1-7-2017, except where the GTA opts to pay tax under forward charge @ 12%.
Person paying freight to GTA is liable to pay tax under reverse charge
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 person who receives the service for the purpose of this notification.
Exemption to service provided by GTA to unregistered person (other than where reverse charge applies):
In case of services supplied to unregistered person by GTA (other than where reverse charge applies), the service is exempt w.e.f. 13-10-2017.
In case where service is provided by GTA to factory, society, company, partnership firm or registered person, the recipient is liable to pay tax.
Where GTA provides services to unregistered person, service is exempt.
Thus, after 13-10-2017, the GTA itself is never liable to pay tax, except where the GTA opts to pay tax under forward charge @ 12% [6% plus 6%].
Till 13-10-2017, GTA was liable to pay GST in following cases –
(a) When recipient of service is unregistered individual person
(b) Transportation of household goods when the freight is paid by unregistered individual person
(c) Services supplied to person located outside taxable territory (like transport to Bhutan, Nepal, Bangladesh) where the recipient is paying freight.
Mere bill is not consignment note –
In Nandganj Sihori Sugar Co. v. CCE (2014) 46 GST 570 , it was held that consignment note issued by GTA represents its liability to – (a) transport consignment handed over to it to destination (b) undertake delivery of same to consignee and (c) temporarily store till delivery. Mere bill issued for transportation of goods cannot be treated as a Consignment Note.
Service provided by person who does not issue consignment note is not taxable
If driver of goods carriage is self-employed either by taking vehicle on rent from other or as owner of one or two vehicles, he does not issue any consignment note. He has direct contract with consignor/consignee. He himself receives freight from consignor/consignee. He would not be liable to GST. Only GTA which issues a consignment note is liable to GST tax.
Exemptions in respect of goods transport of specified goods
Services provided by a goods transport agency, by way of transport in a goods carriage of following are exempt from GST –
(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 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 man-made disasters, calamities, accidents or mishap; or
(h) Defence or military equipment
– Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, effective from 1-7-2017.
Exemption to supply of services to transit cargo to Nepal and Bhutan
Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries) has been exempted. – Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) as amended on 29-9-2017.
Exemption to service of giving vehicles on hire to GTA
Services by way of giving on hire to a goods transport agency, a means of transportation of goods is exempt from GST – Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate), effective from 1-7- 2017.
Thus, there is no GST on vehicles given to GTA on hire (as many GTA do not have their own vehicles).
