Taxability of Goods Transport Agencies under GST

Who is Goods Transport Agency (GTA) –

As per Para 2(ze) of Notification No 12/2017 – Central Tax (Rate) dated 28th June 2017 “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.

The word Consignment note has not been defined in the GST, however as per rule 54(3)

(3) a goods transport agency shall issue a tax invoice or any other document containing the following –

• Gross weight of the consignment,
• Name of the consigner and the consignee,
• Registration number of goods carriage in which the goods are transported,
• Details of goods transported,
• Details of place of origin and destination,
• GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency, and
• containing other information as mentioned under rule 46.

As per Explanation to Rule 4B of Service Tax Rules, 1994 consignment note means a document, issued by a GTA 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.

• GTA – Forward Charge

GTA is taxable under forward charge basis if

1. the supplier has taken registration under the CGST Act and exercised the option to pay tax on the services of GTA in relation to transport of goods supplied by him under forward charge by filing the declaration in Annexure V; and
2. the supplier has issued a tax invoice to the recipient charging Central Tax at the applicable rates and has made a declaration as prescribed in Annexure III on such invoice issued by him.

• GTA – Reverse Charge

A Goods Transport Agency intending to revert under reverse charge mechanism to be filed before the commencement of any financial year to be submitted before the jurisdictional GST Authority in Annexure VI.

As per section 9(3) of CGST Act, 2017 tax on SPECIFIED CATEGORIES of supply of goods or services or both shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax.

As per Sr No 1of Notification No 13/2017-Central Tax(Rate) dated 28th June 2017, GTA Service, will be under reverse charge if

• Supplier has not opted forward charge;
• the recipient is located in the taxable territory and
• the recipient is out of the 7 specified categories which is mentioned in the column no 4 of this notification. In short 7 Specified recipients are Factory, Society, Co-operative Society, Registered person in GST, Body Corporate, Partnership Firm, and Casual Taxable Person

• GTA Service – Exempt Supply

GTA Service will be exempt in following cases – 

1. Transportation for Specified purpose/goods – Refer below Point No 4A
2. Recipient is not covered in the 7 specified categories – Refer below Point no 4B
3. Transportation of goods by road other than GTA – Refer below point no 4C
4. Services provided by a GTA, to Central Government or State Government etc. registered only for the purpose of TDS u/s 51 of CGST Act – Refer below point 4D,

4A. GTA Service is exempted for Specified Purpose/Goods –

As per Sr No 21 of Notification No 12/2017 – Central Tax Rate dated 28^th June 2017 (as amended), GTA Service will be exempted in the following cases –

Services provided by a GTA, by way of transport in a goods carriage of –

• Agricultural produce;
• Milk, salt and food grain including flour, pulses and rice;
• organic manure;
• newspaper or magazines registered with the Registrar of Newspapers;
• relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
• Defence or military equipment.

4B. Supplier is GTA but recipient is not out of 7 specified categories

GTA Service will be under reverse charge only if the recipient is out of the 7 specified categories. As per Notification No 32/2017 – Central Tax (Rate) dated 13^th Oct 2017 a new serial number i.e. Sr. No 21A is added in the exemption Notifications No 12/2017 Central Tax (Rate). According to this serial no. if the recipient is unregistered and does not cover in the specified categories then such transportation service will be exempted.

21A

Heading 9965 or Heading 9967

Services provided by a Goods transport agency to an unregistered person, including an unregistered casual taxable person, other than the following recipients, namely:— any factory registered under or governed by the Factories Act, 1948 (63 of 1948); or 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; orany Co-operative Society established by or under any law for the time being in force; or any body corporate established, by or under any law for the time being in force; or any partnership firm whether registered or not under any law including association of persons; any Casual taxable person registered under the GST Act

4C. If the Supplier (Transporter) does not issue the consignment note

If the Supplier does not issue the consignment note (Bilty/LR) then such service of Transportation of Goods by Road (Like Tempo, Auto etc) will not be categorised as GTA Service. In common parlance, it is called the service provided by GTO (Goods Transport Operator). Such supply is exempted vide Serial No 18 of Notification No 12/2017 – Central Tax (Rate) dated 28^th June 2017.

4D. GTA Services provided to Central Government, State Government etc.

As per the proviso of Sr No 1 of RCM Notification 13/2017 CT Rate, if GTA provide the service to Govt who is registered only for the purpose of Sec 51 (TDS purpose), the no RCM is applicable. Also, said service is exempted as per Sr No 21B of Notification No 12/2017 – Central Tax Rate.

• Rate of Tax on GTA Service
  • Under forward charge 5% without ITC and 12% with ITC
  • Under RCM 5% with ITC

• Whether 5% and 12% both can be opted same time by GTA

Yes. A GTA cannot opt forward Charge and reverse charge both in one financial year however if a GTA opted forward charge then such GTA can charge GST @5% and @12%both in a Financial Year. In this case, said GTA has to reverse the proportionate ITC to the extent of 5% because it is an exempt supply as per explanation (iv) of the Notification 11/2017 Central Tax Rate. The said explanation is produced as under –

“(iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, 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 section 17(2) of the CGST Act, 2017 and the rules made thereunder.”

• Who is the recipient

As per explanation (a) to Notification No 13/2017 Central Tax (Rate) dated 28^th June’17, 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.

• Applicability of RCM if Supplier (GTA) is unregistered-

According to Section 9(4) of CGST Act, if the Supplier is unregistered and recipient is registered then such registered recipient will pay the tax under reverse charge. This Section is suspended from 13^th Oct’17 till 30^th Sep’19 by following Notifications of Central Tax Rate.

S.No	Notification No	Date	Brief description
1	38/2017	13th Oct’17	Suspension of RCM u/s 9(4) from 13th Oct to 31st March’18
2	10/2018	23rd March’18	Suspension of RCM u/s 9(4) till 30th June 2018
3	12/2018	29th June’18	Suspension of RCM u/s 9(4) till 30th September 2018
4	22/2018	6th August’18	Suspension of RCM u/s 9(4) till 30th September 2019

However, it is important to note that Goods Transport Agencies is falling under reverse charge by virtue of section 9(3) which is not suspended. Therefore, even if the GTA is unregistered, still the recipient will be liable to pay the tax under RCM. 

• Documentation for recipient under RCM
  • Self-Invoice as per Section 31(3)(f) of CGST Act–

A registered person who is liable to pay tax under section 9(3)or 9(4) shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both.

• Payment Voucher as per Sec 31(3)(g) of CGST Act

A registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier

1. Reporting of GTA Transaction by Supplier and Recipient in GSTR 3B and GSTR 1

By Supplier of GTA Service (If registered)	Recipient of GTA Service who is liable to pay tax under RCM
In GSTR 1 Table 4B – If recipient is registered then it is reported in the Table 4BTable 8 – If it is exempt Supply (Like falling under serial no 21A of Notification No 12/2017)Table 12 – Details of HSN Code Table 13 – Tax Invoice Number	In GSTR 1 No where reported as GSTR 1 is the statement for outward supplies.   Table 13 – Self-Invoice number Payment Voucher Number (Explained above in detail in the Documentation)
In GSTR 3B Table 3.1.aReversal of ITC in the Table 4B2 as outward RCM is exempt supplier in the hand of GTA who has opted RCM	In GSTR 3B Table 3.1.d (‘Inward Supply liable to Reverse Charge’) – For liability to pay tax under RCMTable 4.A.3 (Inward Supply liable to reverse charge other than 1 & 2 above) for taking the ITC of taxes paid under RCM

Nature of supply is determined based on two factors i.e. the location of Supplier (LOS) and Place of Supply (POS).If LOS and POS are in same state/ Union Territory (UT) then the supply will be intra state (Section 8 of IGST Act) and CGST & SGST will be paid. Vice versa If LOS and POS are in two different state or two different Union Territory or in one state ot one UT then the supply will be interstate (Section 7 of IGST Act) and ICGST will be paid

Location of Supplier will be determined as per Section 2(71) of CGST Act and Place of Supply for transportation of goods by road is determined as per Section 12(8) of IGST Act which says that location of recipient if the service is provided to registered person.

Example – Mr A is a registered person in Delhi and have purchased goods from Rajasthan. Goods are transported by road to Delhi by a transporter of Rajasthan. Therefore, we can say that Location of Supplier is Rajasthan. Now the recipient (being Mr A,as he is liable to pay the freight) is of Delhi. Therefore, place of supply as per Section 12(8) is Delhi being the location of the recipient. Therefore, it is an Inter State Supply as per Section of 7 of IGST Act and Mr A will pay IGST under Reverse Charge.

E Invoice for GTA

As per Notification No 13/2020 – Central Tax dated 21.03.2020, Supplier of GTA service is exempted from issuance of E-Invoice, however as per rule 46(s), following declaration is required to be mentioned by GTA if AATO is more than 5 Cr.

“I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”