Gst service tax on freight outward payable on rcm?

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J. vijay kumar (Querist)
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07 August 2017 Dear Experts,

We are in the trading of iron & steel, we raise sale invoice to our customers without charging any freight in the bill (P.O. terms - delivery at supplier s cost or free on road).
The transporter will raise the bill for payment (without service tax GST) in our name & the same will be paid by us.

Now the query is - Do as a registered dealer - Service recipient we need to pay service tax under RCM? if yes can the GST be claimed by us as ITC on output GST payable on our product?

Please advise.

CA Altamush Zafar

CA Altamush Zafar (Expert)
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07 August 2017 Does the transporter gives consignment note (bilty)? If yes then rcm applicable @ 5%. Credits will be available.

J. vijay kumar

J. vijay kumar (Querist)
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07 August 2017 Thanks for reply.
Yes the transporter will issue consignment note.

Sir,
I have spoken over GST help desk number 1800 425 3787, there reply is you can claim ITC on freight inward paid under RCM but not on freight outward. Still you have to pay 5% GST as we are making payment to transporter.
Their logic is same as service tax rule, wherein a manufacturer can claim cenvat credit in Service Tax paid on freight inward only on RCM basis & not on freight outward though paid under RCM basis.

Hope u understand my query.

This is for your updation and further advise if any.

Can u share any notification or rule on the same, i.e., ITC can be claimed on GTA when paid on freight outward on RCM basis.

Thanks in advance

CA Altamush Zafar

CA Altamush Zafar (Expert)
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07 August 2017 In GST the only thing liberal is the credit policy. The definition of input service is also very wide as compared to rule 2(l) of cenvat credit rules. Moreover credits on outward transportation has not been specifically excluded under section 17(5) of cgst act. Please read section 2 clause 60, 62, 63. You will find that the only thing required is that the service received should be in the course or furtherance of business.

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