Gst Applicability in case of C & F Agent

[Mr Patel]

Dear Sir

My Query as under:

1. C & F agent are providing Ocean freight, Air Freight and other service separately and Gst rates 5, 5, and 18 respectively.

2.for Import/export of goods he is taking the services from Non resident companies in this case RCM would be applicable.

3. if RCM is applicable then he has not reported from since July 2017 to till then how pay and claim the credit.

4.Ocean freight from 01/01/2018 to 30/09/2019 was exempted can we take the benefits in case of RCM.

5. in case of C & F is correct to charges separately as Ocean/Air freight, other service instead of Handing charges.

Please provide the your valuable opinion in this case.

[KASTURI SETHI]

Is the period mentioned at serial no. 4 above correct ? Date 30.9.19 ?

You will have to pay GST along with interest before being pointed out by the department/before the issuance of SCN otherwise penalty will be imposed.

You cannot take ITC under RCM as it has become time barred. Regarding time of supply of services under RCM, read Section 13 (3) of CGST Act.

[KASTURI SETHI]

C & F agent is a pure agent. So freight can be shown separately.

[Mr Patel]

Thank you sir for your reply..

1.About Point 4 - exemption for Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India, Services by way of transportation of goods by an aircraft from customs station of clearance in India to a place outside India as per Notification No. 9/2017-Integrated Tax (Rate) from 25 Jan 2018 to 30/09/2018 as amended Notification No. 15/2018- Integrated Tax (Rate) till 30/09/2019.

2. I would like to inform you that as per recent clarification regarding annual return and reconciliation if RCM related FY 2017-18 paid in the FY 2018-19 we can utilize the credit in the FY 2018-19, since the company yet to be file the Mar-19 GSTR-3B therefore we can claim the same in this return only for the period of July 17 to 24 Jan 2018.

Please share your opinion in this regard.

[KASTURI SETHI]

W.r.. dated 8.7.19 at serial no.3 above :

Point No. 1 : Pl. go through the notifications word for word deeply. How these are applicable to the situations explained by you.

Point No. Pl. go through Order No.2/18-CT dated 31.12.18 (Removal of Difficulties).

ITC could be availed up to the due date for March, 19 Return. It does not means you can claim ITC at the time of filing return for March,19 as per your sweet will.

[Mr Patel]

Thanking you for prompt reply..

1.Agreed in case of RCM..if we report now belonging to FY 2017-18 we could not claim the same, it would be cost for company along with interest as per your provided Order No. 02/2018-Central Tax. Any resolution if any please..

2. In case of Air/Ocean freight some time agent will provide inclusive services to customers but in the billing he is mentioning separately like Air/Ocean freight, other handling charges and charging GST rates like 5%, 5%, 18% respectively and collecting the Invoices in his own name from service provider. In this case can we claim the benefit of the above mentioned notification for taking the exemption.

[KASTURI SETHI]

CHA is also a pure agent. He can mention freight separately. Invoice in original should be endorsed to you. Check thoroughly whether exemption is available.

If exemption is available in respect of ocean freight incurred while importing from a foreign location, that exemption will be available to you because imported goods belong to you.

[Mr Patel]

w.r..dated 08/07/2019 serial no.4

With respect to mentioned order No.02/2018-Central Tax, i would like to know about any effect on recent judgment of Gujarat High Court strikes down press release extending last date to avail input tax credit.

Can you take the benefit of this Judgment.

[KASTURI SETHI]

In this case the department is likely to file appeal against this judgement. The Courts interpret the law.Since the matter is sub judice, we are to go by the Act and Rules which are in force at present. Sometimes any issue lingers on in various courts. So it is advisable to go by the GST Acts and Rules. Be safe.

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir, the Hon'ble High Court decision is likely to be challenged in the Higher Court.

AI Summary

Reverse charge mechanism for non resident freight services affects GST payment and time barred input tax credit claims. Where C&F agents contract non-resident suppliers for ocean/air freight and other services, the Reverse Charge Mechanism may apply and GST must be paid timely; ITC under RCM is subject to time-bar and may only be availed up to the due date for the March return of the following year per Order No. 02/2018 and relevant notifications. C&F agents as pure agents can show freight separately and, if exemption for international carriage applies to the underlying service, the importer may claim that exemption provided original invoices are endorsed and notification conditions are met.