Service tax on freight

[Guest]

Dear Sir,

I am the transporter of multiple goods inter-state,how should i collect service tax on consignment

for ex: I Collect for one parcel 120 from the party for transporting charge, any amount is fixed to pay service tax

experts please give ur views.

[Ganeshan Kalyani]

If you are a Goods Transport Agency (GTA) then you are exempt from registration. And you are free from collecting and paying tax to the exchequer. The consigner or consignee whoever pays the freight shall pay tax under reverse charge.

[Rajagopalan Ranganathan]

Sir,

If you issue consignment note for transporting the goods then you mare deemed to provide GTA Service and the reply given by Shri. Ganesan Kalyani hold good.

However, Sl. No. (b) & (c) of Notification No. 11/2017-Central Tax (rate) dated 28.6.2017 states that " goods, where consideration charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees. and

goods, where consideration charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred and fifty.

Therefore you can take a decision regarding payment of gst on transportation of goods by road after taking into consideration the observations made above.

[KASTURI SETHI]

I support the views of both experts. Keeping in view the quantum of work and inter state transportation of work, it appears to me your work is beyond the conditional exemption as detailed above. So be careful while claimg any kind of exemption under GTA.

[KASTURI SETHI]

Dear Querist (GTA),

I further add that preference-wise liability for payment of GST on freight is as under:-

1. Consignee

2. Consignor

\ 3. Any third person

4. Transporter (by road)

If above three persons refuse to pay GST on freight, whatever may be the reason, GTA is legally required to pay GST on freight for transportation of goods by road. So your freedom from registration as well as GST liability is restricted. Your "degree of freedom" exists until or unless refusal by above three persons i.e. 1, 2 & 3.

In other words, not full freedom.

[Himansu Sekhar]

You are not exempted from paying tax if the service is not to a specified category. Assuming your turnover is above the 20 lakhs limit, single consignment above 750 and multiple consignments above 1500 leviable to tax. If the service is suppose to a propritorsip concern, you will pay the tax.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir's view. Further, if you were to pay tax then there are two options with you. Either pay GST @5% without credit i.e. do not avail input tax credit on your inputs Or pay GST @12% and avail all input tax credit.

[KASTURI SETHI]

I agree with views dated 14.9.17 of both experts. Thanks for additional information. This is the all round benefit to the Querists.

[RAMESH PRAJAPATI]

Excellent explanation by the experts. Really, The GOI has given very good option to GTA to avail ITC and pay tax. This will be beneficial for GTA and customer both.

[Ganeshan Kalyani]

Sir, i think the government by giving an option of input tax credit availability to the transporter, they are motivating unorganised sector (transporter) to participate in the chain of seamless flow of credit.

AI Summary

GST on freight: reverse-charge priority places payment obligation on consignee, consignor or payer before transporter liability. Where a transporter issues a consignment note and provides Goods Transport Agency (GTA) services, the consignee, consignor or a paying third person is primarily liable under the reverse charge mechanism; conditional exemptions for low-value consignments may remove tax liability. If these persons refuse payment, the transporter becomes liable. Taxable transporters may choose between a restricted-credit regime and a full input tax credit regime, and must assess turnover and consignment-value conditions before deciding on registration and tax treatment.