Service from GTA to GTA

Hi

We have a business having 200 crores turnover of goods and we used transportation service from various transporters. To increase profitability we decided to buy our own trucks for transportation. In return we will give a contract to some transporter "X" for transportation from the city of our customers to our own city. We will take GTA registration and raise the bill on the transporter "X" for approx. 90% of the actual transportation. We face the following issues ?

1. Whether we have to charge GST on the transporter "X" or not.
2. Whether we have to add GTA Service in our GST Registration. Which option should we opt for. Forward or RCM. 5% or 12%.
3. Whether any dispute on existing any type of tax raised on the whole turnover including existing 200 crores.
4. Whether we have to issue any consignment note.
5. Last and most critical, we have a mix supply of taxable and exempt supply. We avail credit of input GST in ratio of turnover of taxable goods to total turnover. No input will be used for transportation service turnover except the purchase bill of the trucks. If we opt for forward charge then how much cenvat of trucks can we avail and how the effect of the part of transportation sales service into total turnover on input of other goods and services.

Please give advice.

Thanks in advance.

Hey Yogin, this is a classic GST scenario involving Goods Transport Agency (GTA) services and owning trucks. Let me break down your queries one by one:

1. Do you have to charge GST on transporter "X"?

If your company registers as a GTA and provides GTA services to transporter "X", yes, you must charge GST on the amount you bill them.
GTA services are taxable, generally at 5% GST without ITC or 12% GST with ITC option.

2. Do you have to add GTA Service in your GST Registration? Which option to opt for — Forward charge or Reverse Charge Mechanism (RCM), 5% or 12%?

Since you are providing GTA services, you need to register this activity in your GST Registration as a supply of services.
You will charge GST forward (output tax) on GTA service to transporter X, so you cannot opt for RCM on your outward GTA services.
For GTA services, the supplier can opt for:
- 5% GST without ITC (composition scheme for GTA services)
- OR 12% GST with ITC (normal scheme)
Choose based on whether you want to avail input tax credit on truck purchases and other inputs related to transportation.

3. Any dispute on existing taxes raised on entire turnover including the 200 Cr?

Your existing turnover of 200 Cr on goods supply is separate from your GTA services business.
There should be no direct impact on goods turnover tax due to GTA service registration, provided you maintain proper segregation and compliance.
Just ensure correct classification of your turnover and GST returns.

4. Do you have to issue any consignment note?

GTA services require issuance of a consignment note to the person who engages the transportation.
You must issue a consignment note as per GST law for the transportation service provided to transporter X.

5. Input Tax Credit (ITC) related question regarding trucks and mix supply

Since you have mixed supplies (taxable + exempt goods) and you apportion ITC based on turnover ratio:
- For the truck purchase, if you opt for 12% GST with ITC on GTA services, you can avail ITC on GST paid on trucks.
- The ITC on trucks will be added to your overall ITC pool and apportioned according to the turnover ratio (taxable vs exempt).
- Since transportation service turnover is not related to goods supply, input credit related to trucks will be partially available based on the proportion of taxable turnover.
- If you opt for 5% GST without ITC on GTA services, you cannot claim ITC on trucks or inputs related to transportation.
Carefully maintain records and calculate ITC apportionment as per Section 17(2) (blocked credits) and Rule 42/43 of CGST Rules.

Summary & Suggestion:

Aspect	Advice
GST on GTA service to Transporter X	Yes, charge GST forward.
Registration	Add GTA service under your GST Registration.
GST Rate	Choose 5% no ITC or 12% with ITC based on ITC needs.
Consignment Note	Mandatory for GTA services.
ITC on trucks and inputs	Available only if 12% with ITC option is chosen; apportion as per turnover ratio.