Indirect Tax

Goods Transport Agency in GST (Goods and Service Tax)

  1. The definition of Goods Transport Agency is provided in clause (ze) of notification no.12/2017-Central Tax (Rate) dated 28.06.2017.
  2. (ze) “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;
  3. It includes not only the actual transportation of goods, but any intermediate/ancillary service provided in relation to such transportation, like loading/unloading, packing/ unpacking, trans-shipment, temporary warehousing, etc. If these services are not provided as independent activities but are the means for successful provision of GTA Service, then they are also covered under GTA.
  4. It can be seen that issuance of a consignment note is the sine-qua-non for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency.
  5. 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.
  6. In terms of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by notification no. 20/2017- Central tax (Rate) dated 22.08.2017, sr.no. 9 and sr. no. 11, (i) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) (Heading 9965 & 9967 respectively) attracts GST @ 5% or 12%.
  7. The rate of 5% is subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken.
  8. The Explanation 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 subsection (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made there under.
  9. Where the GTA is not eligible to take ITC for the supplies effected by it and the liability under GST is discharged under reverse charge basis, the recipient of GTA service discharging the tax liability is entitled to take Input Tax Credit (ITC) of the amount of tax paid under reverse charge, provided it is used in the course or furtherance of business at his end. The recipient would be eligible for ITC of the GST paid by GTA on forward charge basis.
  10. Notification no. 11/2017-Central Tax (Rate), sr.no.11, (ii) also provides that supporting services in transport other than those mentioned in (i) (Heading 9967) would attract GST @ 18%. Similar rate has been prescribed for services falling under heading 9965 in terms of notification no. 11/2017-Central Tax (Rate), sr.no. 9 (v)
  11. Person Liable to Pay GST on GTA services – The liability to pay GST devolves on the recipients for supply of services by a goods transport agency (GTA) who has not paid tax at the rate of 12%, in respect of transportation of goods by road (in terms of notification no. 13/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.1) as amended by notification no. 22/2017-Central Tax (Rate) dated 22.08.2017, if the recipients (located in the taxable territory) belong to the following category: –
    1. Any factory registered under or governed by the Factories Act, 1948 (63 of 1948); or
    2. 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
    3. Any co-operative society established by or under any law; or
    4. Any person registered under Goods and Services Tax Act; or
    5. Anybody corporate established, by or under any law; or
    6. Any partnership firm whether registered or not under any law including association of persons; or
    7. Any casual taxable person.
  12. In cases where services of GTA are availed by the above categories of persons in the taxable territory the GTA supplier has the option to pay tax (and avail ITC) @12% and if the GTA does not avail this option, the liability to pay GST will fall on the recipients.
  13. In all other cases where the recipients do not fall in the categories mentioned above, the liability will be on the supplier of GTA services.
  14. In terms of notification no.12/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.21), the following services provided by a GTA (Heading 9965 or 9967) is exempt from payment of tax: Services provided by a goods transport agency, by way of transport in a goods carriage of:
    1. agricultural produce;
    2. goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
    3. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty;
    4. milk, salt and food grain including flour, pulses and rice;
    5. organic manure;
    6. newspaper or magazines registered with the Registrar of Newspapers;
    7. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
    8. defence or military equipments.
  15. 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 28.06.2017 (sr.no.22) – Services by way of giving on hire:
    1. (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.

 

(Excerpts from https://www.cbic.gov.in/resources//htdocs-cbec/gst/Goods%20Transport%20Agency%20in%20GST_11%20September%202017.pdf)

e-invoicing for turnover exceeding 100 Cr Notification 88/2020

In pursuance of the Notification No. 88/2020 – Central Tax dated 10th November, 2020, the Central Government has made further amendment to the Notification No. 13/2020 dated 21st March, 2020 whereby with effect from 1st day of January, 2021, for the words five hundred crore rupees the word one hundred crore rupees shall be substituted.

In the Notification  No. 13/2020 – Central Tax dated 21st March, 2020 it was notified that registered person, other than those referred in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover in a financial year exceeds one hundred crore rupees, as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule(4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person.

As per Rule 54 of the Central Goods and Service Tax (CGST) Rules, 2017 sub-rules (2), (3), (4) and (4A) covers: –

(2) Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company,

(3) Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage

(4) Where the supplier of taxable service is supplying passenger transportation service

(4A) A registered person supplying services by way of admission to exhibition of cinematograph films in multiplex screens

(5) The provisions of sub-rule (2) or sub-rule (4) shall apply, mutatis mutandis, to the documents issued under rule 49 or rule 50 or rule 51 or rule 52 or rule 53.

As per Rule 48 on Manner of issuing invoices: –

(4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on the recommendations of the Council, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification.

(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.

(6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule (4).]

Standard Operating Procedure (SOP) to be followed by the exporters

  1. Through the Circular No.131/1/2020-GST dated 23rd January, 2020 Central Board of Indirect Taxes and Customs has communicated that several cases of monetisation of credit fraudulently obtained or ineligible credit through refund of Integrated Goods & Service Tax (IGST) on exports of goods have been detected in past few months. On verification, several such exporters were found to be non-existent in a number of cases.
  2. In all these cases it has been found that the Input Tax Credit (ITC) was taken by the exporters on the basis of fake invoices and IGST on exports was paid using such ITC.
  3. To mitigate the risk, the Board has taken measures to apply stringent risk parameters-based checks driven by rigorous data analytics and Artificial Intelligence tools based on which certain exporters are taken up for further verification. The refund scrolls in such cases are kept in abeyance till the verification report in respect of such cases is received from the field formations. Further, the export consignments/shipments of concerned exporters are subjected to 100 % examination at the customs port.
  4. Exporters whose scrolls have been kept in abeyance for verification would be informed at the earliest possible either by the jurisdictional CGST or by Customs.
  5. To expedite the verification, the exporters on being informed in this regard or on their own volition should fill in information in the format attached as Annexure ‘A’ to the Circular and submit the same to their jurisdictional CGST authorities for verification by them.
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