GTA PROVIDING SERVICES TO GTA

[NAMAN DOKANIA]

A GTA -1 is taking services from truck operators and is providing trucks on hire to another GTA-2 and then the same is being providing to factory owner. The tax is being paid by Factory owner on bill raised by gta-2 on reverse charge. Do GTA-1 need to raise any GST bill to GTA-2??

[Atul Rathod]

Its an exempted service. Not required to raise GST bill

Service by way of giving hire to GTA a means of transportation of goods.

[SHARAD ANADA]

This transaction is Nil rated. See entry 22(b) of Notification 12/2017 amended from time to time

[Ganeshan Kalyani]

GTA 1 is not providing GTA service. He is supplying vehicle for renting. In my view, the supply of vehicle service is taxable.

[KASTURI SETHI]

Dear Querist,

I agree with the views of Sh.Ganeshan Kalyani Ji.

In this scenario, three persons are involved and two transactions are involved. Truck operator to GTA-1 and GTA-1 to GTA-2.

For example ; suppose truck operator is 'A'. 'A' has supplied truck on hire basis to GTA-1 ( suppose -'B') and 'B' has supplied truck to GTA-2 ( suppose-'C') . A's supply to B is exempted as detailed by my colleague experts. This transaction (A to B) is not in dispute. B has arranged supply of vehicle to C and obviously he has got rental charges or commission for that from C. We can term these charges as consideration (may be in the form of commission/rent/profit, whatever the case may be the case). This consideration has been received by B from C on account of taxable supply.This transaction conforms to the definition of 'supply' as per Section 7 of CGST Act, 2017 which is extract below:-

SECTION 7. Scope of supply. - (1) For the purposes of this Act, the expression “supply” includes -

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

Thus B (GTA-1) will raise tax invoice to C (GTA-2) because A has received consideration either as rental charges or commission charges. If B has got commission, his activity will fall under the category of 'intermediary service' and if B has got rental charges, this very activity will fall under the category of 'Right to Use of Tangible Goods'. So it depends upon the nature of agreement between the two that is B and C. I am not aware of the terms and conditions of the agreement.

Anyhow GST is to be paid by B.

AI Summary

Exempt supply of goods transport services can become taxable when an intermediary rents or charges consideration for vehicle hire. The initial hire from the truck owner to the intermediary is an exempted supply. A separate taxable supply arises when the intermediary supplies the vehicle to a downstream hirer for consideration; that supply is taxable as either an intermediary service (if commission) or Right To Use Of Tangible Goods (if rental), and the intermediary should issue a tax invoice and account for GST on the consideration received.