GST implication of Transportation Service of Bulk POL Products

[Narayan Vaishnav]

I am running transportation business and having contract with HPCL & Essar Oil Ltd

total 45 tankers of different capacities are running into those contract.

I have 25 tankers in owned category and 20 tankers into attached category (attached category means owners of tankers are other person and as per mutual agreement between me and them, their vehicle(s) will be inducted into my transportation contract with HPCL anbd Essar Oil Ltd. for a period of 5 years and out of freight receipt from these companies to me, I hold a fixed percent of freight viz 2% to 5% and balance will be credited to these other vehicle owners account.

These Company are charging RCM on my freight receipts and now I want to register into GST as my turnover limit crossed ₹ 40.00 Lacs.

I want to clear whether GST on RCM basis will have to be deposit by me on freight charges paid to these attached vehicle(s) or their is any other system have to be followed.

Please advice about GST implications as these attached vehicle owners are single vehicle owner and not registered into GST and as per present freight receipt projections each vehicle will be getting almost 25 to 30 lacs of freight receipts during a complete year.

Please advice what to do and how to do. ?

[Shilpi Jain]

If the attached vehicles belong to single owners and they do not issue any consignment note, there would be no GST liability as there is an exemption. So you would also not be liable under RCM.

[Rajagopalan Ranganathan]

Sir,

Since HPCL and Essar Oil Ltd.are registered companies under Companies Act they are liable to pay service tax/gst under reverse charge mechanism. However you have to issue consignment note to HPCL and Essar Oil Ltd. If you are not issuing a consignment note then there is no liability to pay service tax/gst.

[Ganeshan Kalyani]

The nature of service you provide being GTA is under reverse charge mechanism. As a reason the receiver of service will pay GST. As you say the companies are paying GST. Now if you wish to register you still will option to either start charging GST on the invoice raised on the companies and pay tax under forward charge. Or stay under reverse charge method for liability discharge. You will have to file GSTR 1 and GSTR 3B return.

[KASTURI SETHI]

GST on freight is to be paid by either of these :

(i) Consignor (ii) Consignee (iii) GTA under forward charge and this status remains the same whether pre-GST era or post GST regime.GST is to be paid by those who bears the freight whether consignor or consignee. You can pay GST under Forward Charge Mechanism @ 12% and take ITC.

For discharging GST liability on freight three notifications are to be read conjointly and these are as under:-

1. Notif. No. 11/17-CT(Rate) dated 28.6.17 (Serial Nos.9 -HSN 9965 & 11 HSN 9967).

2. Notif.No.12/17-CT (Rate) dated 28.6.17 (Serial No.18 HSN 9965 and Serial No.21 for exemption for specific goods)

"I want to clear whether GST on RCM basis will have to be deposit by me on freight charges paid to these attached vehicle(s) or their is any other system have to be followed." For this query see the following notification:

3.Notification No.11/17-CT(Rate) dated 28.6.17( Serial No.22 HSN 9966) exempts GST on hiring on the following condition :-

Services by way of giving on hire -

(a) _______________________

(b) to a goods transport agency, a means of transportation of goods; or

Non-issuance of consignment note cannot be alibi for non payment of tax.

You are to get yourself registered as GTA. Read all the notification thoroughly and thereafter you may post further query.

AI Summary

GST Implications for Transportation Businesses: Understanding Reverse Charge and Exemptions for Freight Receipts from Attached Vehicles A transportation business owner with contracts involving HPCL and Essar Oil Ltd. inquired about GST implications for freight receipts from attached vehicles, owned by others. The responses clarified that if attached vehicles belong to single owners who do not issue consignment notes, GST liability may be exempt. Under the reverse charge mechanism, the companies are liable for GST. The owner can register for GST and choose between forward or reverse charge mechanisms. It was advised to read specific notifications to understand GST obligations and consider registering as a Goods Transport Agency (GTA).