Goods Transport operator

[Ashwin Bhalakiya]

Wishing happy New year !

A company registered under companies Act. They have their own trucks. They are doing transport services . They have not taken the GST number. They are providing all trucks for services to one manufacturer ,taking consignment from one place to another. For transit this company is preparing consignment note, and at month end raising one Bill in the name of Manufacturer. The Manufacturer is paying on reverse charge GST. Is this mechanism is correct?

Further while return of vehicle , they take some agents consignment and deliver goods as per direction of Agent. The freight received is credited in accounts as lorry freight , on this it was advised that GST is not applicable and it is exempt. Would like to know whether this is correct.

Pl give your valuable advice/ opinion, if any more questions on this required I will provide the details.

Thanks.

[Shilpi Jain]

The moment consignment note is issued it would be a GTA service and liable under reverse charge unless the GTA pays at the rate of 12%.

in all other cases of road transport, that is where consignment note is not issued no GST liability exists

[KASTURI SETHI]

GTO and GTA both are different terms. GTO is not GTA. This aspect has to be taken care of.

[Shilpi Jain]

The department does not consider GTO to exist at all. As per them all transportation is liable .

[Shilpi Jain]

So many people just pay tax and take credit

[KASTURI SETHI]

The following decision of AAAR Maharashtra clearly explains the difference between GTO and GTA.

"Appellant only a Goods Transport operator and not a GTA - Activity of appellant appropriately covered under SAC 9966 of Notification No. 11/2017-C.T. (Rate) and taxable accordingly - Impugned AAR ruling sustainable. [paras 9, 10, 17]"-------AAAR Maharashtra In reference Liberty Translines reported as 2020 (9) TMI 1104 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

AI Summary

GTA service: consignment note issuance triggers reverse-charge liability unless the transporter pays the prescribed rate. Issuance of a consignment note converts road transport into a GTA service subject to the reverse-charge mechanism unless the transporter itself pays tax at the prescribed rate; absence of a consignment note has been treated as non-taxable. Distinguishing GTO from GTA affects applicability of the notified transport-rate regime and tax classification, and factual analysis is required to determine exemption on return-trip consignments.