I. Determination of type of tax payable where the service availed form GTA
As we aware if the supplier of goods or services and place of supply of goods or services are located in same State, then CGST and SGST of that State is payable. However, if the supplier and place of supply are located in different States, then IGST is payable
Location of Supplier of GTA service
The term 'Location of Supplier of Service' has been defined in section 2(15) of the IGST Act which is as follows :
(15) 'location of the supplier of services' means:
(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;
Thus depending on whether GTA is registered or not location of GTA service supplier will be determined accordingly.
Place of Supply in GTA services
The section 12(8) of the IGST Act,2017 determines place of supply for GTA services .The sub-section (8) states as follows :
(8) 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.
As per sub-section (8) place of supply of service shall be determined separately for service recipient, if he is registered or for unregistered service recipient. This provision can be explained by as follows :
A. Recipient is registered
Say, the company registered under GST is availing the GTA service from various suppliers located either within State or outside State. To determine whether the supply is inter-state or intra-state, the following points needs to be taken into consideration:
- In case the GTA supplier is located within the State in which the company is registered, it shall be treated as intra-state supply and the company shall pay CGST and SGST / UTGST accordingly.
- In case the GTA supplier is located outside the State, it shall be treated as inter-state supply and the company shall pay IGST accordingly.
Further, the company shall consider the Invoice / Lorry Receipt / Consignment Note to determine whether the GTA supplier is located within or outside the State and accordingly, determine the nature of supply in the above manner.
B. Recipient is not registered
In case recipient of service is not a registered person, as per clause (b), the place of supply of service is the place where such goods are handed over for the purpose of transportation. Say M/s A Transporter having office in Mumbai is hired by person B in Ahmedabad for transportation of goods. Mr. B is unregistered under GST and has stock of goods lying at warehouse located in Mumbai. Mr. B requests the transporter M/s A to transport the goods from Mumbai to Nagpur. M/s A supplies the service of transportation of goods to Mr. B and deliver the goods at Nagpur. Therefore, the place of service will not be determined by sub-section (8)(a) but will be determined as per sub-section (8)(b). M/s A has taken the delivery of goods from the godown in Mumbai. Therefore, the place of supply of service shall be Mumbai where the goods have been handed over to M/s A for the purpose of transportation of goods and accordingly CGST and SGST of Maharashtra will be payable.
II. Person liable to pay tax
The liability to pay tax depends whether GTA avails credit of input tax on goods or services or not. Where GTA does not avail credit then in such case recipient is liable to pay tax @5% under Reverse charge and recipient will get the credit of the same. However where GTA avails credit then in such case GTA is liable to pay tax under forward charge @12% and the recipient will get the credit of the same.
Please see this video to understand the major amendment and type of tax payable in GTA service (Explanation in Hindi)