RCM-Applicability to a Trader

[Guest]

Dear sir

A is the manufacturer at GJ.

B is the End user at TN ordered a product X on A.

B intend to transport X from A's place at GJ to B's project site at MH.

Trading firm C (Only GST registered - sole proprietorship firm) @ KA intend to take this order from B. Since C does not have vehicles C wants to utilise the service of GTA. Hence C introduces a GTA D and offload the order. C is the authorised agent of D to promote their business formally entered an agreement.

C receives the order from B and offload to D

D will raise the bill to C and C will raise the bill to B.

Waybill would be issued to D by A & B & Consignment not would be issued by D

Opinion from the experts needed how this transaction could be made through . who has to charge GST? if so what would be the %

Thanks for support

[KASTURI SETHI]

Who bears the freight expenses on account of transportation of goods by road, will pay GST under RCM, if GTA is not under FCM.

A is consignor. B is ultimately consignee. C is working for and on behalf of B. C is also agent of D (GTA). C is intermediary.Freight on account of transportation of goods is borne by B. Actually, D has transported the goods belonging to B to the project site in Maharashtra.

Inter-State supply is involved for the supply of goods and services (transportation of goods by road i.e. (GTA) both

1. IGST is applicable for supply of goods and services.

2. Since ultimately freight is borne by B, being, de facto buyer of x product from A, B will pay IGST @ 5% under RCM.

This is my view.

[Guest]

Dear KM sir

Thanks for your reply. in such case what will be the billing of C & D?

Both are registered under GST. Whether both have to claim 5% in their billing ?

AI Summary

Reverse charge applies to road freight where consignee bears transport cost; consignee liable to pay IGST under RCM. When interstate road transportation of goods is effected by a Goods Transport Agency and the freight is borne by the ultimate consignee, the transportation service is taxable as an interstate supply attracting IGST and the consignee who pays the freight is liable to discharge tax under the reverse charge mechanism for the GTA's services.