GST on Courier charges

[Kaustubh Karandikar]

XYZ(India) is a freight forwarder who is transporting goods from India to a place outside India for his client in India. In relation to this transportation, the client in India had given XYZ certain documents for sending the same via courier to the customer of the client outside India. XYZ had sent the same by courier and recovered the courier charges from the client in India. Is XYZ liable to pay GST on courier charges recovered? In my view it will fall under Section 12(2)(a) of IGST Act and accordingly, XYZ will be liable to pay GST. Views of the experts please.

[Rajagopalan Ranganathan]

Sir,

It is to be ascertained whether XYZ is an intermediary or he is sending the documents to the customer outside India on his own account. In the case stated by you, it appears that the documents are sent by the client of XYZ to his customer outside India. The actual service is provided by the courier. If XYZ pays the service charges to the courier and collects the same from his client, then XYZ is liable to pay gst on courier charges and he can collect the gst component along with courier charges from his client.

[Shilpi Jain]

Place of supply would be as per section 12(8) of the IGST Act I.e place where goods are handed over in India

[Shilpi Jain]

Why are we considering this as an intermediary?

[Kaustubh Karandikar]

Shilpi madam,

Thanks for your views. But in my view 12(8) will get attracted only for transportation of goods. In the issue under discussion, documents are being sent by courier and therefore default section i.e. 12(2)(a) will get attracted and therefore liable to GST. Madam your views please.

[ABHISHEK TRIPATHI]

Dear KK Sir,

“transportation of goods, including by mail or courier to” - that is why it is squarely covered under 12(8). Your courier includes the document.

[Kaustubh Karandikar]

Abhishek sir,

Thanks for your advice. Reproducing the relevant provisions below:

8) The place of supply of services by way of transportation of goods, including by mail or courier to,''

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.

As seen from the above, everywhere in the provisions, it speaks about goods. So it has to be supply of goods which can be either by mail or courier.

You kind advice please.

[ABHISHEK TRIPATHI]

Dear KK Sir,

Sorry, you are right. Missed the proviso.

See, It is not supply of goods, in any case it will be called as "supply of services" because 12(8) says 'the place of supply of services by way of transportation of goods, including by mail or courier to'. If that is the case, then the situation will fall under the proviso and such services will be called as export of services?

That is my doubt !!

12(2)(a) will only come in the picture when it doesn't get covered under the proviso of 12(8), and I think it gets covered under the proviso. And as per the proviso it is definitely not "place where goods are handed over in India" and is the destination.

[Shilpi Jain]

In the present case, there is a supply of service which is courier. Also such courier is for transportation of documents being goods.

The provision does not say that the goods which are being transported should be the ones that are also being supplied.

Think over.

AI Summary

Place of supply determines whether courier charges for sending documents abroad attract GST as export of services. Whether GST applies to courier charges recovered by a freight forwarder for sending a client's documents abroad depends on the place of supply and whether the forwarder is an intermediary. If the forwarder merely pays a courier and recharges the client, the courier service is the operative supply and GST follows that service; if the place of supply is the destination outside India, the service may qualify as export of services, whereas if the place of supply is where documents are handed over in India, domestic GST rules apply.