The terms GTA has not been defined under GST Act, 2017, GST Rules. It is presently defined under the Notification No. 12/2017- Central Tax (Rate) and Notification No. 9/2017-Integrated Tax (Rate) both dated 28-6-2017.
According to para 2 of said notification "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.
However, the term consignment note is not defined under the said Notification. As the entry brought from the erstwhile service tax law, reference of the consignment can be taken therefrom. 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. It is worth to note that mere bill issued for transportation of goods cannot be treated as a Consignment Note. In the case of Nandganj Sihori Sugar Co. v. CCE , it was held that the consignment note issued by GTA represents its liability to - (a) transport consignment handed over to it to destination (b) undertake delivery of same to the consignee and (c)temporarily store till delivery.
Goods transport operator (GTO) are kept outside the purview of GST. GTO is a self-employed person/driver either by taking vehicle on rent from other or as owner of one or two vehicles, he does not issue any consignment note. Exemption is given to GTO vide Notification No 12/2017 Central Tax (rate) dt 28th June, 2017.
Presently, GST is leviable on GTA services under both reverse charge mechanism and forward charge mechanism at the option of GTA. GTA service is classified under land transport services of goods by road under SAC code 996511 and GST is payable at the rate of 5% without ITC or 12% with ITC. Originally, supply of services by goods transportation agency were subject to the payment of tax under RCM vide Notification No. 13/2017-CT (Rates) and 10/2017-IT (Rates) both dated 28-6-2017, effective from 1-7-2017. However, w.e.f. 22-08-2017, GTA has allowed to pay tax at the rate of 12% under the forward charge mechanism. Option to pay GST at the rate of 12% is normally exercised by those GTA, who are having good amount of ITC or by a freight forwarder who in addition to GTA services providing composite services such as packing, clearing and transportation from source to destination basis. In all other cases, liability on transportation of goods by GTA is born by the recipient. Liability to pay tax under reverse charge mechanism is defined under Notification No. 13/2017-CT (Rates) and 10/2017-IT (Rates) both dated 28-6-2017. According to said Notification liability to pay tax under RCM is in the hands of recipient in case supplier of service is GTA and supply of services by a GTA by way of transportation of goods by road is given to -
(a) any factory registered under the Factories Act, 1948
(b) 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; or
(c) any co-operative society established by or under any law; or
(d) any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
(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; or
(g) any casual taxable person.
The provision of reverse charge by a registered person is not applicable where a Government department, local authority or Government Agency is registered under GST only for purposes of TDS under section 51 of CGST Act. Notification No 12/2012 CT (Rate) and Notification No 09/2017 IT (Rate) also provide for certain exemptions in case of transportation of goods by road by GTA as follows-
(a) agricultural produce
(b) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed Rs. 1,500
(c) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed Rs. 750
(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
Apart from the above, GTA services provided to the Government department, local authority or Government Agency where registration by said entity is taken only for purposes of TDS under section 51 of CGST Act are also exempted from the payment of GST.
Taxation of GTA w.e.f. 18th July, 2022
GST council in its 47th meeting held at Chandigarh on 28th & 29th June, 2022 recommended certain changes in the rates of GTA services. All such changes are notified by the board w.e.f. 18th July, 2022.
The changes are categorised into following three categories -
- GTA can pay tax at 5% or 12% under forward charge
- RCM by the recipient at the rate of 5%
- Withdrawal of certain exemptions
a) GTA can pay tax at 5% or 12% under forward charge
Board vide Notification No 03/2022 CT (Rate) dt. 13th July, 2022 and Notification No 08/2022 IT (Rate) dt 13th July, 2022 has given an option to goods transportation agency to pay tax at the rate of 5% /12% under reverse charge mechanism. Such option is subjective and GTA can exercise such option only after fulfilment of certain requirements. Following are the requirements which GTA has to fulfil in order to pay tax at the rate of 5% or 12%
(i) The option to pay tax by GTA itself shall be exercised by making a declaration in Annexure V to the jurisdictional GST authority on or before 15th March of the preceding financial year. For FY 2022-23, option can be exercised on or before 16th August 2022. The option will remain valid till the end of financial year for which it is exercised, and a registered person is not allowed to change the same within a year.
(ii) GTA has an option to pay GST at the rate of 5% without availing ITC on goods and services used in supplying the service or at the rate of 12% with ITC. It seems from the wordings that GTA can exercised to pay tax at both 5% & 12% at the same time for two different services.
However, according to the explanation (iv) to the Notification No 11/2017 CT (Rate) and Notification No 08/2017 IT (Rate) dt. 28th June, 2017 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 sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.
(iii) GTA must provide following declaration on every invoice issued by him that he has exercised the option to pay tax under forward charge mechanism.
I/we have taken registration under the CGST & SGST/IGST Act, 2017 and have exercised the option to pay tax on services of GTA in relation to transport of goods supplied by us during the Financial Year . . . . . . . under forward charge
b) RCM by the recipient at the rate of 5%
In case where GTA does not exercise to pay GST under forward charge mechanism, recipient would be liable to pay tax at the rate of 5%. Input tax credit would be available to the recipient. Recipient would be liable to pay tax under RCM on all such cases where a declaration regarding payment of tax under forward charge mechanism is not given by the supplier.
c) Withdrawal of certain exemptions
Notification No. 12/2012 CT (Rate) and Notification No 09/2017 IT Rate) also provide for certain exemptions in case of transportation of goods by road by GTA. Board vide Notification No 04/2022 CT (Rate) and 04/2022 IT (Rate) dt. 13th July, 2022 rationalised certain exemptions. Following value-based exemptions w.r.t. GTA has been withdrawn w.e.f. 18th July, 2022 -
(a) goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed Rs. 1,500
(b) goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees 750 other specific exemptions w.r.t. GTA services will be continued.
In view of the above, every registered person who is receiving GTA services should verify each of the invoice of the GTA. There is no need to pay tax under RCM where supplier has charged GST in its bill along with the appropriate declaration in the invoice. Cases where tax is not paid by the GTA and declaration in the invoice is not given in the invoice, GST is payable under reverse charge mechanism. One must also remember that exemption of Rs. 750/- or 1500/- for part consignment or full consignment is no longer available.