RCM ON FREIGHT PAID FOR TRANSPORT TO NEPAL

[ROHIT GOEL]

DEAR SIR,

A manufacturer is shipping their goods from Haryana to Nepal via road. The transporter is issuing consignment note for transport service and not charging GST. My question is whether RCM is payable on such transport?

As per my understanding, as per section 13 of IGST Act, place of service is outside India but service supplier is located in India and as such it would be a Inter state supply liable to GST and thus RCM.

AI Summary

Reverse charge mechanism on international freight: exporter may owe IGST despite place of supply being outside India.
When an Indian manufacturer pays a domestic Goods Transport Agency for road carriage to Nepal and receives the consignment note, the supplier and recipient are treated as located in India so Place Of Supply rules (section 12(8) proviso) make the destination outside India and section 7(5)(a) classifies it as an inter State supply; consequently the Reverse Charge Mechanism applies and the manufacturer must discharge IGST on the GTA service, with attendant questions on Input Tax Credit recoverability and potential alternative treatment if the freight is part of a composite exported supply.