Inclusion of service incidental to GTA service

[Debtosh Dey]

If I refer answer to FAQ 6 on Transpsort & Logistics issued by CBITC, I find the last paragraph conveying opposite meaning the paragraphs above it. I reproduce the FAQ-Answer below :

'Question 6: Are intermediary and ancillary services, such as, loading/unloading, packing/unpacking, transhipment and temporary warehousing, provided in relation to 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.'

My query is that can loading, unloading, etc provided incidentally with GTA service, can be invoiced separately with GST (evidently for setting off GST on input service bills for such incidental services) specially when GTA service itself is subjected to reverse charge of GST payable by the customers?

Is there any anomaly between first two paragraphs of the Answer to FAQ 6 cited above and the last paragraph ? (First two paragraphs suggest that incidental services are inseparable parts of GTA service which is the principal service whereas the last paragraph suggests that such incidental services can be separately invoiced).

[Shilpi Jain]

This is not the first clarification which is this way. There was another clarification relating to vehicle repair services where it was clarified that the amount of goods and services disclosed separately in the invoices issued for servicing of vehicles and GST should be charged as per rate applicable for goods separately and for services also as applicable.

Even in this case, on facts it should actually be analysed whether the supply is of service or goods. Though an easy way taken here is to disclose goods and services separately and charge applicable rates!!

[Shilpi Jain]

Also in a circular clarifying rate of tax for battery and UPS a similar kind of clarification was given

AI Summary

Composite supply treatment of incidental services: incidental activities included in GTA invoice taxed with GTA, separate invoicing makes them separate supplies. Incidental activities like loading, unloading, packing, transshipment and temporary warehousing included and charged within the GTA invoice form part of the GTA composite service and are taxed with it; if those activities are provided and invoiced separately they constitute separate supplies and attract independent GST treatment, requiring factual analysis of the nature of the supply and careful invoicing or disclosure for correct tax application.