TRANSPORTATION OF GOODS UNDER GST

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Transportation has very important role in business and the development of a country. Transportation of goods has a vital part in development of a business. Availability of raw material, packing material and plant and machinery from different part of the world and making the finished goods available to the customer in different part of the world depends upon the transportation system. Goods become cheaper and expensive depending on the transportation cost. The government has given separate rates of transportation of goods through different modes of transportation under GST. Transportation of some of the goods have been kept out of the ambit of GST.

Goods are transported by using following means of transportation: -

·         By Air

·         By Water

·         By Road

a.      Rail

b.      GTA

·       By Courier agency

Transport of goods by Air

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	Within India	Yes	18%
2.	From India to outside India	Yes	18%
3.	From outside India to India	Exempt Service	Exempt Service

Transport of goods by water

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	Within India (inland waterways).	Exempt Service	Exempt Service
2.	From India to outside India.	Yes	18%
3.	From outside India to India	Exempt service Conditions: i. Service provided by a person located in non -taxable territory. ii. Services provided to a person located outside the taxable territory. iii. Transportation of goods is done in a vessel.	Exempt service Conditions: i. Service provided by a person located in non- taxable territory. ii. Services provided to a person located outside the taxable territory. iii. Transportation of goods is done in a vessel.

Transport of goods by Road & Courier Agency

S. No.	Particulars	Whether taxable or not under GST?	Tax rate
1.	By rail other than container.	Taxable	5% with ITC on input service.
2.	By rail in container	Yes	12% with ITC on input service.
3.	By Goods Transport Agency	Yes	Two options for transporter: 5% with No ITC or 12% with ITC. (However, the GTA has to opt at the beginning of financial year) Option for recipient: 5% with ITC after payment under RCMs
4.	Services of goods by courier agency	Yes	18% with ITC credit.

Exceptions: -

Services by way of transportation by rail or a vessel from one place in India to another of the following goods -

a.      relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

b.      defense or military equipment’s;

c.       newspaper or magazines registered with the Registrar of Newspapers;

d.      railway equipment’s or materials;

e.      agricultural produce;

f.        milk, salt and food grain including flours, pulses and rice; and

g.      organic manure.

What is Goods Transport Agency (GTA):

Thought the provision are quite simple in respect of other modes of transportation of Goods under GST, however quite an elaborate rules & provisions have been specified in respect of GTA.

“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. The use of the phrase ‘in relation to’ has extended the scope of the definition of GTA. Accordingly, not only the actual transportation of goods, but any intermediate/ancillary service provided in relation to such transportation e.g. loading & unloading, packing, unpacking, transhipment, temporary warehousing, etc. If these services are not provided as independent activities but are the part of GTA Service, then they are also covered under GTA and abatement allowed.

Issue of Consignment Note is integral and mandatory requirement before any road transport can be said to be GTA. If a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency.

Though the Consignment Note is not defined in the Act. In common parlance a consignment note is a document issued by a goods transportation agency against the receipt of goods for the purpose of transporting the goods by road in a goods carriage. On issuance of consignment note the lien on the goods has been transferred to the transporter and the transporter is responsible for the goods till its safe delivery to the consignee. The consignment note consists of the following particulars:

Ø  Name of consignor

Ø  Name of consignee

Ø  Registration number of the goods carriage in which the goods are transported

Ø  Details of the goods

Ø  Place of origin

Ø  Place of destination

Ø  Person liable to pay GST – consignor, consignee, or the GTA

Services provided by a goods transport agency, by way of transport in a goods carriage of no. 12/2017 dated June 28,2017 :-

a.     agricultural produce;

b.  goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

c.  goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;

d.    milk, salt and food grain including flour, pulses and rice;

e.    organic manure;

f.      newspaper or magazines registered with the Registrar of Newspapers;

g.    relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

h.    defence or military equipment's.

*Services by way of loading, unloading, packing, storage or warehousing of rice.

Whose Liability to Pay GST in case of transportation of Goods by GTA:

Ø  GTA will liable to pay tax under forward charge only when

(i)                person who is liable to pay freight is unregistered and

(ii)              turnover of GTA exceeds 20 lakhs.

Ø  If the person liable to pay freight is registered person or GTA ‘s aggregate turnover does not exceed 20 lakhs then consignor/consignee is liable to pay GST under reverse charge.

Ø  If service supplied to person located outside taxable territory (like Nepal & Bhutan), and the recipient is paying the freight than GTA will liable to pay tax.

Reverse Charge in case of GTA: Normally a service provider is required to pay taxes, but in case GTA provides the services to the following persons, recipient of services is required to pay GST under reverse charge:-

a.      any factory registered under or governed by the Factories Act,1948;

b.     any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of India;

c.       any co-operative society established by or under any law;

d.      any person registered under CGST/SGST/UTGST Act;

e.      anybody corporate established by or under any law; or

f.    any partnership firm whether registered or not under any law including association of persons;

g.      casual taxable person.

Accordingly, the person who pays or is liable to pay freight for transportation of goods in goods carriage, located in taxable territory shall be treated as the person who receive the service. Or to say if the consignee is required to pay freight to GTA then it would be liable to pay GST or if the responsibility to pay freight lies with consignor then the consignor would be liable to pay GST.

Place of Supply for Transportation of Goods (including courier):

Within India

If the service by way of transportation of goods, including by courier have been provided to A registered person - then place of supply of shall be the location of registered person.

If the service by way of transportation of goods, including by courier have been provided to A other than a registered person -then place of supply shall be location at which goods are handed over for their transportation

Here, the providing of service belongs and referred to the person who is paying the freight.

Outside India

If service provider or recipient is situated outside India, the place of supply of service of transportation of goods, other than by way of courier, shall be the place of destination of goods.

Whether CGST and SGST or IGST

• If location of service provider and place of supply are in same state then CGST and SGST will be charged.

 • If location of service provider and place of supply are in different state then IGST will be charged.

Time of Supply

If the GST payment is to be made by the service recipient under RCM then earliest of the following event would be considered as the date of supply:

Ø  The date on which the payment is entered in the books of accounts or bank account is debited or

Ø  The date immediately following the 60 days from the date of issue of invoice

If Not able to ascertain then take the date on which entry done in the books of accounts.

If the GST payment is to be made by the GTA under forward charge then earliest of the following event would be considered as the date of supply:

Ø  Date of issue of Invoice or

Ø  Date of Receipt of payment

In conclusion, the provision in respect of transportation of good under GST especially in case of GTA are bit complicated with varied rate (with or without ITC) and onus to pay tax is also hard to determine. There are various GST enabled accounting software in the market that help to provide the correct determination of tax under various circumstances along with keeping the correct records in this respect.