GST on Transport & Logistics services- Answer to 19 FAQs

GST on Transport & Logistics services- Answer to 19
FAQs

Q 1. I am a single truck owner-operator and I ply my truck mostly between States,
carrying the goods booked for my truck by an agent; aggregate value of service
which I provided exceeded twenty lakh rupees during last year. Am I supposed to
take registration?
Ans. You are not liable to registration, as services provided by way of transportation of
goods by road are exempt. Please refer to Notification no. 12/2017-Central Tax (Rate),
dated 28th June, 2017.
Q2. I own a single truck and I rent it to a major player, who provides GTA service;
should I take a registration? Does my monthly rental/lease income attract GST?
Ans. Registration is not required since services by way of giving on hire, a means of
transportation of goods to a GTA are exempt from tax vide entry no. 22 of Notification no.
12/2017-Central Tax (Rate) dated 28th June, 2017.
Q3. In my truck, I only carry fruits and vegetables, in relation to whose transportation
service GST is exempt; should I take registration?
Ans. Services by way of transportation of goods by road other than by a GTA or a courier
agency are exempt from tax under entry no. 18 of Notification no. 12/2017-Central Tax
(Rate) dated the 28th June, 2017 and thus you are not liable for registration.
Q4. I am a truck supplier/ broker. My job is to get orders for truck owners. I quote the
rate for transportation to GTA on behalf of truck owners and I get a small amount as
commission out of the truck hire fixed with the GTA. This brokerage is paid by the
truck owners. As the services provided by way of transportation of goods by road
are exempt from tax, am I liable to registration?
Ans. You are liable to registration if the aggregate amount of commission received by you
in a financial year exceeds Rs. 20 lakh (Rs. 10 lakh in special category States except J &
K).
Q5. As a transporter, am I required to maintain any records of my services of
transportation?
Ans. Yes, in terms of Section 35(2) of the CGST Act, 2017 you are required to maintain
records of the consigner, consignee and other relevant details of the goods. Further, in
terms of Rule 56 of the CGST Rules, 2017 you are required to maintain records of goods
transported. delivered and goods stored in transit by you along with the GSTIN of the
registered consigner and consignee for each of your branches.
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Q6. Are intermediary and ancillary services, such as, loading/ unloading, packing/
unpacking, transshipment and temporary warehousing, provided in relation to
transportation of goods by road to be treated as part of the GTA service, being a
composite supply, or these services are to be treated as separate supplies.
Ans. The GTA provides service to a person in relation to transportation of goods by road in
a goods carriage, which is a composite service. The composite service may include various
intermediary and ancillary services, such as, loading/ unloading, packing/ unpacking,
transshipment and temporary warehousing, which are provided in the course of transport of
goods by road. These services are not provided as independent services but as ancillary to
the principal service, namely, transportation of goods by road. The invoice issued by the
GTA for providing the said service includes the value of intermediary and ancillary services.
In view of this, if any intermediary and ancillary service is provided in relation to
transportation of goods by road, and charges, if any, for such services are included in the
invoice issued by the GTA, such service would form part of the GTA service and would not
be treated as a separate supply. In fact, any service provided along with the GTA service
that is part of the composite service of GTA shall be taxed along with GTA service and not
as separate supplies. However, if such incidental services are provided as separate
services and charged separately, whether in the same invoice or separate invoices, they
shall be treated as separate supplies.
Q 7. As per Notification no. 05/2017-Central Tax dated 19th June, 2017, the persons
who are only engaged in making supplies of taxable goods or services or both, the
total tax on which is liable to be paid on reverse charge basis by the recipient of
such goods or services or both under Sub-Section (3) of Section 9 of the CGST Act,
2017 are exempted from obtaining registration under the said Act. Please clarify
whether a GTA providing service in relation to transportation of goods by road under
Reverse Charge Mechanism (RCM) can avail of the benefit of this exemption.
Ans. Yes, a GTA providing service in relation to transportation of goods by road under
RCM can avail of the benefit of this exemption.
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Q 8. Can a GTA obtain registration for one vertical (Rail, Cargo, Renting,
Warehousing etc.) for which tax needs to be paid while not obtaining registration for
another vertical (GTA under RCM) on which there is no tax liability.
Ans. No, because the business entity is not engaged exclusively in the supply of services
liable to tax under Reverse Charge Mechanism.
Q 9. In transport industry, old vehicles, old tyres, scrap material etc, on which no
Input Tax Credit (ITC) has been taken, are disposed of after completion of their
useful life. As a truck owner disposing of these goods, am I required to pay GST
considering that no ITC has been taken at the time of their initial purchases? Would
levy of tax in such cases not amount to double taxation, as tax has already been paid
at the time of initial purchases?
Ans. Under Section 7 of the CGST Act, 2017 supply includes all forms of supply of goods
such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or furtherance of business. Sale or
disposal of old vehicles, old tyres and scrap material for a consideration would therefore
attract GST regardless of whether ITC has been availed or not.
Q 10. Please clarify whether Input Tax Credit is available to the recipient of service,
when the GST paid by him is at a concessional rate of 5% under RCM.
Ans. Yes, Input Tax Credit is available in such cases.
Q 11. When a GTA hires a truck (with driver) from another GST registered entity for
the purpose of providing goods transport service to a registered recipient, whether
tax credit is available to the GTA on the GST paid by him to the owner of the truck
registered under GST.
Ans. Services by way of giving on hire to a GTA, a- means of transportation of goods are
exempt from GST under Notification no. 12/2017-Central Tax (Rate) dated 28th June 2017.
When the tax is not payable, the question of taking any tax credit does not arise.
Q 12. In terms of Section 12(9) of the IGST Act, 2017 the place of supply of passenger
transportation service to a person other than a registered person, shall be the place
where the passenger embarks on the conveyance for a continuous journey. In
Section 2(3) of the IGST Act, 2017, the term “continuous journey” has been defined
to mean a journey for which a single or more than one ticket or invoice Is issued at
the same time, either by a single supplier of service or through an agent acting on
behalf of more than one supplier of service, and which involves no stopover between
any of the legs of the journey for which one or more separate tickets or invoices are
issued. Do all stopovers cause a break in continuous journey? Does the definition of
“continuous journey” include instances whereby the stopover is for any period of
time?
Ans. The term “stopover’ has been explained in Section 2(3) of the IGST Act, 2017 to
mean a place where a passenger can disembark either to transfer to another conveyance
or break his journey for a certain period in order to resume it at a later point of time.
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However, all stopovers do not cause a break In continuous journey. Thus a travel on Delhi-
London-New York on a single ticket with a halt at London will be covered by the definition of
continuous journey. However, the return journey of New York-London-Delhi will be treated
as a separate journey and will be outside the scope of a continuous journey.
Q. 13. How GST Is to be charged on a multi-leg International journey, say Delhi-
Dubai-Boston-Dubai- Delhi? Is GST chargeable for the entire journey and discharged
at Delhi, or the GST is to be charged for Delhi-Dubai sector alone and discharged at
Delhi, or GST is to be charged up to the farthest point of return, i.e. Delhi-Dubai-
Boston at Delhi?
Ans. In this case if a single ticket or invoice has been issued for the Delhi-Dubai-Boston
then it is a continuous journey even if there is a stopover at Dubai and the tax (CGST +
SGST) would be charged at Delhi. The return journey of Boston-Dubai-Delhi would not be a
continuous journey. The return journey not being a continuous journey and its place of
supply being outside India. the said journey, would be liable to tax if the location of the
supplier is in India.
Q. 14. Is the electronic ticket receipt acceptable as a tax invoice for the purpose of
GST? Is there any requirement for the Airlines to issue a proper tax invoice?
Ans. Yes. the electronic ticket in the global standard format (and without further
modifications) is acceptable as a tax compliant invoice for GST purposes, regardless of the
value of the transaction. Rule 54(4) of the CGST Rules, 2017 refers. However, for B2B
supplies, a tax invoice may be provided to enable the registered business customer to
claim Input Tax Credits.
Q. 15. Is there any requirement for electronic ticket receipts issued to be signed or
digitally signed for GST purposes?
Ans. No. In terms of Rule 54(4) of the CGST Rules, 2017 in the case of passenger
transportation service, a tax invoice shall include ticket in any form, whether or not serially
numbered, and whether or not containing the address of the recipient of service but
containing other information as mentioned under Rule 46 of the Rules ibid. As the
electronic tickets issued by the Airlines are in the global standard format, such electronic
ticket receipts are not required to be signed or digitally signed.
Q 16. Whether the Airlines are required to issue invoice to the customers
transaction-wise, (i.e. Airway Bill-wise, Ticket Journey-wise) or a consolidated
invoice, capturing the details of all individual invoices for a particular entity, can be
issued on a monthly or fortnightly basis?
Ans. A single invoice incorporating the details of all the supplies for a particular-entity can
be issued subject to provisions of Section 31 of the CGST Act, 2017. In such a case the
ticket issued by the Airlines would not take the character of an invoice.
Q 17. Would GST be applicable on air travel undertaken on or after 1st July, 2017 on
tickets issued prior to is July 2017 on which Service Tax was collected and
discharged.
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Ans. As Service Tax has already been collected and discharged by the Airlines on tickets
issued prior to 1st July, 2017, there shall be no GST on such tickets even though the travel
date is on or after 1st July, 2017.
Q 18. Does the GST treatment on fees for ancillary services in relation to air transport
follow that of the underlying air transport service?
Ans. Yes, ancillary services are part of the service of transporting a passenger by air and
do not constitute a separate supply of service. In this respect, ancillary services include
services that are incidental to the transport of passengers by air (e.g., excess baggage
charges, date change charges, un-accompanied minor fees, preferred seat charges,
cancellation fees etc.) Consequently, ancillary services shall be treated within the same
category of service as transport of passengers by air’ and shall attract the same rate of
GST as applicable to the transport of
Q 19. Will Airlines be entitled to Input Tax Credits under the GST transitional rules if
the liability to pay service tax arises, due to resolution of litigation or disputes, after
implementation of GST?
Ans. Yes, Section 142(6)(a) of the CGST Act, 2017 provides that every proceeding of
appeal, review or reference relating to a claim for CENVAT credit initiated whether before,
on or after the appointed day under the existing law shall be disposed of in accordance with
the provisions of the existing law, and any amount of credit found to be admissible to the
claimant shall be refunded to him in cash, not with standing anything to the contrary
contained under the provisions of the existing law other than the provisions of Section 11
B(2) of the Central Excise Act, 1944.
Note: Reference to CGST Act, 2017 CGST Rules, 2017 includes reference to SGST
Act, 2017 SGST Rules, 2017 and UTGST Act, 2017 / UTGST Rules, 2017 also.
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