Transport of goods by a manufacturing Company

[SayadAziz Ahmad]

If we charge Transportation Charges for supply of products manufactured in our own company, should we charge GST on the value of Freight Charges. If so what rate should be used and what will be the HSN code for the Freight Charges.

[KASTURI SETHI]

Pl. elaborate the query. Who is supplier of service ? Who is receiver of service ? What is relationship between the two persons ? What is constitution of both (supplier and receiver) ?

[SayadAziz Ahmad]

1. Company manufacturing furniture.

2. Sends furniture to customers in company owned vehicle.

3. Charges freight in its invoice alongwith manufactured product.

4. Company is presently charging same rate of gst for freight as it charges for naufactured products HSN code.

Question is what GSN should be used for freight. Should it charge freight also under HSN 9403?

[KASTURI SETHI]

Practice adopted at serial no.4 above is correct. In this scenario, it takes the shape of composite supply. HSNs of both kinds of supplies should be mentioned separately on the invoices.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir. It is a composite supply and GST rate of main material i.e. furniture in your case applies to freight charges as well. You are supplying furniture and not freight. Freight is only incidental to main supply. It takes a form of composite supply. You are correctly following the rule.

[SayadAziz Ahmad]

Thanks to Mr. Kasturi for his valuable inputs and thanks to all others who ratified his views.

AI Summary

Company Confirms Correct GST Application on Freight Charges as Composite Supply; Use Same Rate as Main Product A manufacturing company inquired about the application of GST on transportation charges for delivering its products. The company charges freight in its invoices alongside the manufactured goods and currently applies the same GST rate as the products. The discussion concluded that this practice is correct as it forms a composite supply. The GST rate for the main product, furniture in this case, applies to the freight charges. It was advised to list the HSN codes for both the manufactured goods and freight separately on invoices, confirming the company's current approach is appropriate.