Inter GTA Services, Goods and Services Tax - GST

[Bayyareddy DK]

Sir,

My client is a GTA agent. He is getting orders from another GTA service provider as sub contract/ whole contract. Is this Inter GTA services allowed in the same line of business. Please Advice.

Posts / Replies

[Pradeep Reddy]

Can you slightly elaborate the query please

[Bayyareddy DK]

My client Mr. A who is a GTA Agent who issues a consignment note & who actually execute the orders. Mr A will receive the orders Mr B who is also a GTA an agent. Mr. B will get orders from the end customers.

Mr B will issue a consignment note to end customers but he sub-contracts all orders to Mr A. Mr. B acts a middleman.

My question is whether One GTA agent issue invoice to another GTA agent? Is Mr. B liable to pay RCM on the invoices raised by Mr. A?. Mr A & B both are registered under the GST Act

 

[Pradeep Reddy]

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.

As per Explanation to Rule 4B of Service Tax Rules, 1994, 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 in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency

In the instant case Mr. B is the GTA as he is the one who issuance consignment note to the ultimate customer containing such details mentioned above for transportation by road.

As regards Mr.B's services to ultimate customers, Mr. B can pay GST under forward at (a) 12% by availment ITC on his input services or (b) 5% without availing ITC on his input services or customer can pay GST under RCM at 5% (assuming they are falling under category of recipient who are liable to pay GST under RCM notification).

As regards Mr. A's services, they are liable to GST at 18% as Supporting services in transport under SAC 9967 or residual goods transport services under 9965.

Alternatively Mr. A can structure the transaction as supply of truck on hire to GTA ( Mr. B) for the purpose of transportation which is exempt from GST as per sl.no. 22 (b) of 12/2017- Central Tax (Rate), Dated: June 28, 2017.

Any other views are welcome.

[KASTURI SETHI]

Dear Querist,

(i) In GTA service, a person who pays (bears) freight will pay GST. This was the position in pre-GST era also. There is no change in this aspect in GST regime.

(ii) B is acting as intermediary as well as GTA. B should bifurcate both activities and pay GST on both services. Exemption by way of hiring is not possible in this scenario.

(iii) If due tax is paid in both categories, there is no such restriction. as asked by you.

(iv) Proper classification for payment of GST is an absolutely must. Tax should be paid under correct SAC/HSN.

(v) A person who is liable to pay tax should pay tax and NOT other person, if paid by other person, though there will be no loss of revenue but penal action will follow for a procedural lapse.

[Shilpi Jain]

The person issuing the consignment note is GTA. The transaction with other person can be executed as a hire of vehicle to be exempt from GST.