Place of supply for GTA under GST

[CA.VINOD CHAURASIA]

Introduction:  This article discusses in detail about GT place of supply GTA and nature of its taxability under GST.

Query 1: 'A', a buyer registered in Andhra Pradesh receives GTA services from VRl Logistics which is registered in Telangana by way of Transportation of Goods from 'B' who is a registered Dealer in Tamil Nadu. In this Case how the GST is paid under Reverse Charge Mechanism. 

Query 2: If transporter is registered & he do not charges GST than is it duty of consignee pay GST & get input credit of GST. And, if transporter is not registered & he sends goods from Delhi to Agra & no GST is charged, now is it duty of consignee to pay GST. Please advise the whether IGST or CGST/SGST is to be deposited?

Ans:  As per  Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017, “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

This means, while others might also hire out vehicles for goods transportation, only those issuing a consignment note are considered as a GTA.

So, individual truck owners who do not book cargo and issue consignment note in normal course of business are, not GTA and accordingly, services provided by them are not liable to service tax.

GST will not apply on transport of following goods by a goods transport agency-

1. agricultural produce
2. milk, salt and food grain including flour, pulses and rice
3. organic manure
4. newspaper or magazines registered with the Registrar of Newspapers
5. relief materials meant for victims of natural or man-made disasters
6. defence or military equipment
7. goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage is less than ₹ 1,500
8. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed ₹ 750.

Is a GTA liable to register?

As per Notification No. 5/2017- Central Tax dated 19/06/2017, a person who is only engaged in making supplies of taxable goods/services, where the total tax on which is liable to be paid on reverse charge basis by the recipient as the category of persons exempted from obtaining registration under GST.

Thus, a GTA does not have to register under GST if he is exclusively transporting goods even if the turnover exceeds 20 lakhs as the total tax is required to be paid by the recipient under reverse charge basis.

Services	Turnover	GST Paid by
Case I
Transporting goods of registered dealers or any of the 8 items as mentioned above	12 Lakhs	Registered dealer or recipient of services under RCM
Transporting goods of unregistered persons	4 Lakhs	No one
Total Turnover	19 Lakhs	Aggregate turnover being less than 20 Lakhs, GTA is not required to be registered.
Case II
Transporting goods of registered dealers or any of the 8  items as mentioned above	19 Lakhs	Registered dealer or recipient of services under RCM
Transporting goods of unregistered persons	4 Lakhs	GTA
Total Turnover	23 Lakhs	Aggregate turnover being more than 20 Lakhs, GTA is required to be registered.
Case III
Transporting goods of registered dealers or any of the 8  items as mentioned above	25 Lakhs	Registered dealer or recipient of services under RCM
Transporting goods of unregistered persons	00000Lakhs	------------
Total Turnover	25 Lakhs	Aggregate turnover more than 20 Lakhs. GTA is  still not required to be registered as per Notification No. 5/2017- Central Tax dated 19/06/2017.

Reverse Charge in case of GTA

Normally a service provider is required to pay taxes, but in case a GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge (notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) :-

1. Factory registered under the Factories Act,1948
2. A society registered under the Societies Registration Act, 1860 or under any other law
3. A co-operative society established under any law
4. A person registered under GST
5. A body corporate established by or under any law; or
6. A partnership firm whether registered or not (including AOP)
7. Casual taxable person

Who will pay under Reverse Charge Basis?

As per Notification No. 13/2017- Central Tax dated 28/06/2017, 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 receiver of service.

What if, the payment is made by sender?

If the supplier of goods (consignor) pays the GTA, then the sender will be treated as the recipient & he will pay GST on reverse charge basis.

What if, the payment is made by receiver?

If the liability of freight payment lies with the receiver (Consignee), then the receiver of goods will be treated as a receiver of transportation services & will pay GST on reverse charge basis.

Situations showing who is liable to pay GST in case of a GTA services

GTA service Provider	Supplier / Consignor	Receiver / Consignee	Person liable to pay freight	Person liable to pay GST
GTA	Company “A” (whether registered or not under GST)	Company “B” (whether registered or not under GST)	Company “A”	Company “A”
GTA	Company “A” (whether registered or not under GST)	Company “B” (whether registered or not under GST)	Company “B”	Company “B”
GTA	A Company (whether registered or not under GST)	Partnership firm (whether registered or not under GST)	Company	Company
GTA	Partnership firm / Co-op Society (whether registered or not under GST)	Registered Dealer	Dealer	Dealer
GTA	Partnership firm / Co-op Society (whether registered or not under GST)	Registered Dealer	Firm / Co-op Society	Firm / Co-op Society
GTA	Unregistered Individual “A”	Registered Dealer	Registered Dealer	Registered Dealer
GTA	Unregistered Individual “A”	Registered Dealer	Unregistered Individual “A”	GTA (If GTA is registered)
GTA	Unregistered Individual “A”	Unregistered Individual “B”	Unregistered Individual “B”	GTA (If GTA is registered)

Rate of Tax

1. GTA can opt for 12% GST with ITC or
2.  5% GST with no ITC. 

However, the GTA has to give an option at the beginning of financial year.

Input Tax credit for the recipient of GTA services

In case of reverse charge, the person responsible for paying tax is the service recipient who is not supplying the GTA service so the concern of using any inputs to supply GTA service does not arise in his case.

He is liable to pay GST only because of RCM.

So GST paid on GTA under RCM can be availed as ITC by the person paying the tax

Place of Supply

As per section 12(8) of IGST Act 2017, the place of supply of services by way of transportation of goods, including by mail or courier to––

(a) a registered person, shall be the location of such person

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

So in the given query,

The place of GTA supplier is “ Telengana”  &  

The place of supply is “Andhra Pradesh” being the location of registered recipient.

Accordingly, IGST shall be paid by the registered recipient on such transaction.

A few more examples

Rajesh is a registered dealer in Bangalore. He hires a GTA to deliver goods to Mumbai.

Place of supply will be Bangalore.

Anita is unregistered dealer in Gujarat who hires a GTA to deliver goods to Rajasthan.

Place of supply will be Gujarat where Anita hands over the goods to the transporter.

Vikas is registered in both Mumbai and Bangalore. He hires a transporter (based in Mumbai) to deliver from Bangalore to Delhi.

CGST & SGST will be applicable.

If the transporter is based in Chennai, then IGST will be applicable.

Invoicing for GTA

Any GST compliant invoice of a GTA must have following details-

1. Name of the consignor and the consignee
2. Registration number of goods carriage in which the goods are transported
3. Details of goods transported
4. Gross weight of the consignment
5. Details of place of origin and destination
6. GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency
7. Name, address and GSTIN (if applicable) of the GTA
8. Tax invoice number (it must be generated consecutively and each tax invoice will have a unique number for that financial year)
9. Date of issue
10. Description of service
11. Taxable value of supply
12. Applicable rate of GST (Rates of CGST, SGST, IGST, UTGST and cess clearly mentioned)
13. Amount of tax (With breakup of amounts of CGST, SGST, IGST, UTGST and cess)
14. Whether GST is payable on reverse charge basis
15. Signature of the supplier

Returns to be Filed by a GTA

If all the services of the GTA fall under RCM then a GTA is not required to register.

If a GTA registers, then it will have to file the normal 3 monthly returns – GSTR-1 (sales), GSTR-2 (purchases-no ITC available) & GSTR-3 (monthly summary & tax liability).

FAQs on GTA

Rahul hired a GTA to transport his goods. The consideration charged was ₹ 1,200.  Will Rahul pay GST?

Rahul will not pay GST under RCM as the consideration for transportation of goods on a consignment transported in a single carriage is less than ₹ 1,500.

Vinod hired a GTA to transport goods. The GTA was asked to come 2 days as Vinod would receive the goods in batches. The entire consideration was ₹ 600. Will Vinod pay GST?

Vinod will not pay GST because the consideration charged for transportation of all such goods for a single consignee does not exceed ₹ 750.

Mr. Rahul, a working professional, is moving houses and hires XYZ GTA to transport his household items. XYZ demands Rahul to pay GST under RCM as moving charges are ₹ 6,000. Rahul is confused.

Ans: Rahul is unregistered and if XYZ GTA is also unregistered under GST then, GST is not applicable.

If XYZ is registered, then it will pay GST of 5%. RCM will not apply on Rahul.

Ram, a garments shop owner in Kolkata, hires a truck to deliver goods from wholesaler to his (Ram’s) shop. Ram’s turnover is less than 20 lakhs and he has not registered under GST. The GTA demands that Ram should pay tax under RCM. Ram argues that since he is not registered, he does not have to pay any GST.

Ans: Only the persons above (Notification No. 13/2017- Central Tax (Rate) dated 28th June, 2017) are required to pay GST under RCM. Unregistered dealers (Ram) purchasing goods/services from unregistered GTA do not have to pay GST under reverse charge mechanism. If the URD hires from  a registered GTA, then the registered GTA is liable to pay GST.

So, Ram is not liable to pay GST under RCM.

Ram now purchases garments from Assam and pays for a truck to deliver the goods to his shop in Kolkata. The GTA says that Ram has to register for GST as he is making an inter-state purchase as only registered dealers can have inter-state trade.

Ans: An unregistered person can make inter-state purchases. For making inter-state sales, he will have to be compulsorily registered.

Since Ram is an unregistered dealer and the GTA is also unregistered then the concept of RCM does not arise.

The GTA is registered at Assam and its branch is collecting cash in kolkata on his behalf. Recipient of service Ram is in kolkata. If Ram was registered, would he have charged IGST or SGST/CGST under RCM?

If the original transporter in Assam sends the bill to Ram, then IGST should be charged. If the branch sends the bill then SGST/CGST will apply.

Ram has received a one-time contract to sell garments to a dealer in Mumbai. Ram hires a truck to send the goods.

Since, Ram is not registered under GST, he cannot make any inter-state sale. To make an inter-state sale, he must register as a casual taxable person. Then when he hires a truck to send the garments, automatically he is liable to pay GST under RCM.

Ram decides to voluntarily register. He hires a truck again to transfer goods from the wholesaler to his shop. GTA asks him to pay GST on RCM as he is registered. But Ram’s view is that his turnover is still below 20 lakhs.

Ans: The threshold of turnover does not matter if a person is voluntarily registered. All provisions of GST Act will apply to a registered person. Ram is liable to pay GST under RCM.

Ram’s turnover has increased to 45 lakhs. He wants to shift to composition scheme as he sells mainly to end consumers. But he is worried as his GTA has told him they would not deliver his goods if he is registered under composition scheme as the GTA become liable for GST.

Ans: This is a myth. Even composition dealers are liable to pay GST under RCM. Ram will pay GST on RCM if he hires a GTA whether he is registered as a composition dealer or as a normal dealer.

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The author is a practising CA based in Delhi and is registered Insolvency Professional. He can be reached at [email protected] , Mob. +91 9953587496.