rate of tax on cargo handling charges.

[ved batra]

Is the services of cargo handling charges and the services of transportation of goods by sea or air attract the same rate of tax under GST ?

Is the Services of cargo handling charges is composite service of transportation of goods by sea or air under GST ?

[KASTURI SETHI]

(1) No. Cargo Handling Services are classified under SAC 996719 and attract GST@18%. Transportation of goods by air fall under 996531 and by sea 996521 & 996522.

(2) Not a composite service.

[ved batra]

Sir, Good Morning, Thanks. CBIC vide Question 6 of FAQ's has clarified.

Question 6: Are intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, provided in relation to Page 2 of 5 transportation of goods by road to be treated as part of the GTA service, being a composite supply, or these services are to be treated as separate supplies.

Answer: The GTA provides service to a person in relation to transportation of goods by road in a goods carriage, which is a composite service. The composite service may include various intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, which are provided in the course of transport of goods by road. These services are not provided as independent services but as ancillary to the principal service, namely, transportation of goods by road. The invoice issued by the GTA for providing the said service includes the value of intermediary and ancillary services. In view of this, if any intermediary and ancillary service is provided in relation to transportation of goods by road, and charges, if any, for such services are included in the invoice issued by the GTA, such service would form part of the GTA service and would not be treated as a separate supply. In fact, any service provided along with the GTA service that is part of the composite service of GTA shall be taxed along with GTA service and not as separate supplies. However, if such incidental services are provided as separate services and charged separately, whether in the same invoice or separate invoices, they shall be treated as separate supplies.

With Regards.

V.P.Batra

[KASTURI SETHI]

Dear Batra Ji,

W.r.t. above query at serial no. 2 dated 13.4.20, you need to through the definition of Cargo Handling Services deeply and word for word. Cargo Handling Service is not part of GTA. Both cannot be intermingled. To qualify as composite services, one or more services or goods or both must be naturally bundled. In your example of FAQ issued by Board, do you find any word/words, "Cargo Handling Services" in the answer ?

"Cargo Handling Services' fall under the category of "Supporting Transport Services" under SAC 9967 but both services are not naturally bundled. Examples of Cargo Handling Services are :

(i) Services provided in relation to cargo handling by the Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. There are several other firms which provide Cargo Handling Services. This service has very wide scope. It does not include mere transportation of goods. This does not include passenger baggage and unaccompanied baggage.

[KASTURI SETHI]

From your query it appears that you want to pay tax in respect of Cargo Handling Service @5% which is meant for GTA. That is not possible. GTA is ancillary to Cargo Handling Service and NOT vice versa. In thiis scenario, principal service is Cargo Handling Service.

AI Summary

Tax treatment of cargo handling: treated separately from sea/air transport and not a composite service under GST. Cargo handling services are classified as a distinct category and taxed under their own SAC; they are not a composite supply bundled with sea or air transportation. Transportation by air and by sea have separate SAC classifications and tax treatments. While certain ancillary services may form part of a composite GTA supply for road transport when invoiced together, cargo handling is not naturally bundled with transportation services and, if provided and charged separately, must be treated as a separate supply.