Freight charged/Services by way of transportation of Goods

[Shipra Garg]

Dear Sirs,

Kindly help me in identifying the purpose of Point 9 of GST service exemption list. The same has been reproduced below:

“9. Service by way of transportation of goods

(i.) by road except the services of –

(A) a goods transportation agency; or

(B) . . . . “

Section 15(C) of CGST Act:

“incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;”

With due regards to Section 15 ibid, I am of the view that freight charged by a trader should be kept of GST levy for the reason mentioned in Service exemption list, else what is the purpose of giving such exemption.

Please put some light on it.

AI Summary

Composite supply treatment of freight means bundled freight is taxable as part of the sale of goods despite transport exemption.
Notification No.12/2017 exempts services by way of transportation of goods by road except services of a goods transportation agency or courier; Section 15(2)(c) mandates inclusion of incidental expenses, including freight, in the value of a taxable supply. When freight is bundled with the sale of goods as part of a composite supply dominated by the goods, the freight is included in taxable value and attracts GST. If the transportation service itself is within the exempt category, valuation provisions do not convert that exempt service into a taxable one.