Transportation of goods in an economy is a very crucial element as it helps maintain the logistics industry. It can make or break businesses, which can further affect the whole economy. It thus becomes important to focus on the transportations system and help improve it so that it doesn’t bring down the potential of a business. The transportation of goods in India is done by a courier agency or a transporter. The transporter is known as the Goods Transport Agency (GTA).
Goods Transport Agency is basically a person (transporter) who provides goods transportation services by road by issuing a consignment note. If a transporter hasn’t issued a consignment note, then they won’t be regarded as a GTA. This points-out the significance of consignment notes. Consignment notes are documents issued against goods receipt for goods transportation in a vehicle.
A consignment note tells that the transporter is now in-charge of transporting the consignment and is responsible for their safe delivery to the right address. It contains the details of the consignor, consignee, goods, vehicle registration number, destination, origin, and who is supposed to pay GST. In this case, the consignor, the consignee, or the GTA (transporter) may be liable to the tax, as mentioned in the consignment note. Thus, GST is applicable on a GTA, too.
GTA offers transportation services mainly, but there are various other services that it offers, too. These services are provided as intermediate services, and may include:
• Loading and Unloading of the goods to and from the goods carrier.
• Packing and unpacking of goods.
• Trans-shipment, which means delivering goods to more than one destination/consignee.
• Temporary warehousing of the consignment, and other similar services.
These services are also included in the consignment note if they are covered by the GTA. The place of supply of services by way of transportation of goods to registered persons may be determined by their location, whereas that of unregistered persons may be determined by the location from where the consignment is being provided for transportation.
A Goods Transport Agency is only liable for GST if there is no reverse charge being made. If the GTA is solely supplying goods where the consignee is to pay GST (i.e. reverse charge mechanism or RCM applies), then the GTA is exempted from paying the tax. Usually, reverse charges apply to goods transportation and the receiver of the goods has to pay the tax. GTA is only liable to pay if the total turnover is over 20 lakhs and the recipient is unregistered.However, it is liable to pay GST if the unregistered dealer is delivered with goods worth 1 lakh or more.
Usually, the GST is liable on the recipient who is registered for RCM under the following categories:
• A registered factory under the Factories Act of 1948.
• A registered society registered under any law, such as the Societies Registration Act of 1860.
• A co-operative society registered under any law
• A registered or unregistered partnership firm
• Any organization/body registered under any law
• A taxable person
• A person registered under GST
If the recipient doesn’t come under any of these, then the GTA is liable to pay the tax under RCM. But according to the norm, whoever pays for the freight charges is liable to pay GST. If the GTA is unregistered and the transport charges are worth less than Rs.5000 per day, then the receiver is exempted from paying GST. If service receiver will pay GST under RCM at 5%, then they can avail Input Tax Credit (ITC) for it. Goods Transport Agency is only allowed to pay GST in cash for values of tax up to Rs.10,000.
A GTA’s GST Compliant Invoice must have the names of supplier and recipient, vehicle registration number, details of consignment, details of origin and destination, GSTIN of GST payer, details of GTA including GSTIN (if registered), tax invoice number, issuing date, value of consignment taxable, service description, rate of GST applicable, tax amounts with breakup, if RCM is applicable, and the supplier’s signature.
RCM was followed under the Service Tax system too, which was being used before GST. Since it was still found that most of the transporters are not aware of what is GST, hence it was undertaken by GST too. It becomes evident that the GTA is normally not liable to pay the tax, but may opt for it under forward charge mechanism.A transporter with a consignment note becomes a GTA and provides other services as intermediate services. Thus, they are given provisions like exemption from tax liability, and many more.