GST on Goods Transport by road and Bill To Ship To Mechanism, Goods and Services Tax - GST

[Pankaj P]

Respected Members,

Even after lot of research I am unable to find answer to following questions : -

Query 1: - I'm a GST registered trader based in Delhi and have to sell goods to a buyer based in Kolkata. I will be invoicing multiple products with tax rates as 18% and 28%; along with these products I have to charge freight (Delhi to Kolkata) in the invoice.

- Now, question is what would be the rate of GST on this Freight component that I would charge from buyer and what would be the HSN Code for that?

(P.s. Would be taking services of Good Transport Agency (GTA) for goods transport.)

Query 2: - Earlier I heard that requirement of Way Bill / Road permits have been done away with. But, today I read following circular of Government of West Bengal Directorate of Commercial Taxes - "Trade circular no. 06/2017 Dated: 30.06.2017 Subject: E-waybill under WBGST Ordinance, 2017. It mentions that E Way Bills to be generated before importing goods in West Bengal. This means other states like UP would also have Way Bill / Road Permits? Or only select states have re introduced Way Bills in GST Regime.

Query 3: - Bill to – Ship to transactions in GST regime

Party A: - Manufacturer “Firm Based in Maharashtra”

Party B: - Trader “Firm registered in Delhi”

Party C: - Buyer “Firm Based in West Bengal”

Is it possible for Party B in Delhi to procure goods from Party A, Mumbai and directly ship goods to Party C in Kolkata? Also, what would be the implications regarding "Place of Supply" and earlier E1 / E2 forms were required what about it now?

It doesn't make sense that we first bring the goods to Delhi from Maharashtra and then sent it to Kolkata; as this would lead to freight charges. So, if possible we would prefer Bill to – Ship to transaction.

Would be glad if senior members can help me on my queries...

Regards,

Pankaj

Posts / Replies

[Ganeshan Kalyani]

Reply to query 1 : - The freight that you will be charging on customer thru invoice would attract GST rate of the material that will be supplied.

You will have to pay GST on freight service availed from GTA.

Reply to query 2 :- The provision of e-way bill under GST is not made effective from the appointed date. In view of the same, some states have abolished way bill provision prevailing under VAT law. But some states have still continued to follow the way bill provision as existing under VAT provision.

Reply to query 3 :- I will reply on this soon.

Thanks.

[Pankaj P]

Thanks a lot Ganeshan Sir for your Prompt reply.

However, I have few doubts.

Reply 1 : - In my invoice I am billing two products having different GST rates (18% & 28%); than freight service will have which GST rate - 18% or 28%?

How about those products which have 0% GST; would there be no GST on freight on these items?

& GST on freight service by GTA has to be by RCM?

Reply 2 :- Noted, Thanks

Reply 3 :- Ok Sir

Thanks a lot...

[Kishan Barai]

Generally transporter add 18% GST on his bill & you need to add final transportation value in your bill & them charge GST.

Suppose Product A Cost 100 which attract 18% GST + Transportation 20 then in Bill you need you charge 18% GST on 120 i.e 141.6

Now if it Products B cost 100 attract 28% GST + Transportation 20 then in Bill you need to charge

28% on 128 i.e 163.84

You would not be able to add cumulative transportation cost on Bill for Products with different GST slabs , you need to add separately on Products

[KASTURI SETHI]

I support the views of both experts. GST is on transaction value and all expenses including freight, insurance are to form part of transaction value/taxable value for the purpose of payment of GST.. If consideration is zero but goods bear freight then 5% on amount of freight is to be paid.

[Ganeshan Kalyani]

It is advisable to raise separate invoice for transportation.

[R.S. Mangal]

If no separate freight is shown product wise then GST on freight will be on highest rate of GST applicable on product supplied, which in your case will be 28%.

[KASTURI SETHI]

Yes.Sir, Separate freight is to be mentioned on the invoice itself. I think separate invoice for freight alone is not requirement of GST law. Regards

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

Reagarding query no. 3, please go through sec 10(1)(b)of IGST Act.

[MUKUND THAKKAR]

Query 1: - I'm a GST registered trader based in Delhi and have to sell goods to a buyer based in Kolkata. I will be invoicing multiple products with tax rates as 18% and 28%; along with these products I have to charge freight (Delhi to Kolkata) in the invoice.

- Now, question is what would be the rate of GST on this Freight component that I would charge from buyer and what would be the HSN Code for that?.

if your bill is common for all items than you have to charge GST on freight element also. secondly HSN code for the only product not any other consideration HSN code is available. if any body also ask what is the HSN code of discount which is not possible.

Query 2: - Earlier I heard that requirement of Way Bill / Road permits have been done away with. But, today I read following circular of Government of West Bengal Directorate of Commercial Taxes - "Trade circular no. 06/2017 Dated: 30.06.2017 Subject: E-waybill under WBGST Ordinance, 2017. It mentions that E Way Bills to be generated before importing goods in West Bengal. This means other states like UP would also have Way Bill / Road Permits? Or only select states have re introduced Way Bills in GST Regime.

Not E way bill but treated as Road permit or way Bill for procuring the goods from other state. E-way bill under GST may be implement from the month of october.

Is it possible for Party B in Delhi to procure goods from Party A, Mumbai and directly ship goods to Party C in Kolkata? Also, what would be the implications regarding "Place of Supply" and earlier E1 / E2 forms were required what about it now?

It doesn't make sense that we first bring the goods to Delhi from Maharashtra and then sent it to Kolkata; as this would lead to freight charges. So, if possible we would prefer Bill to – Ship to transaction.

Bill to Ship to Transaction Transaction also intact in GST.. only keep in the mind of basic idea of "Recipient and Receiver" Recipient will be able to take Input tax credit and receiver only goods. you need to raised Separate invoice in favour of your customer. for keeping live of ITC chain.

NO E-1 , E-2 transaction more in GST regime.

[Pankaj P]

Thanks to all the experts in clarifying my doubts on Query 1 & Query 2. 

However, I request more clarity on Query 3 as Im unable to comprehend "Sec 10(1)(b)of IGST Act" regarding 'Bill to Shop' to scenario in my case.

One more point - Don't want to disclose my purchase price to Party C "Buyer" and Sales price to Party "A" manufacturer; within the ambit of GST Law requirement.

Would be glad to get Experts Advice...

Regards,

Pankaj

[HimansuSekhar Sha]

Query 3_ since the goods are sent by the direction of party B,place of supply is Delhi

Query 1- my view- freight value will be added to the value of each product proportionate to the value of goods, to form the transaction value on which gst will be charged. In addition to this , gst on freight will be paid on reverse charge basis

[Jigesh vyas]

Is there any definition of GTA in CGST or IGST act?

[Mulesh Kumar]

Dear Sir/ Madam,

Quiery.....from Delhi to Uttar Pradesh

I am your registered member . I need one advise from your side , if Today i.e. 18th July 2017 if we raised GST invoices from Delhi to Uttar Pradesh, then we need any form like 38 or 39 and any other road permit.

Regards,

Mulesh Kumar

8130490720.

[phani raju konidena]

Answer to 3 query: Please refer to Section 10 (b) of IGST Act, 2017.

Example: a Dealer of Maharastra supplies goods to M/s.XYZ Ltd., of Delhi on the instructions of M/s.ABC Ltd., of Jaipur, in such case the place of supply shall be Jaipur (Rajastan). This stands true when the dealer issues the invoice in name of M/s.ABC Ltd., but where the invoice has been issued in the name of M/s.XYZ directly, the place of supply shall be Delhi.