GTA & Lorry hire

[Sandeep Anand]

Dear Sir,

We are a manufacturer and we purchase raw materials that are sent to our factory via a lorry. We have hired the lorry and paid the driver for the transportation services.

We are unsure whether this transaction falls under the category of GTA services. If it is classified as GTA services, we are also unsure whether RCM is applicable in our case.

Could you please advise us on whether this transaction is classified as GTA services and whether RCM is applicable?

Thanking your Sandeep

[Kiran Tahelani]

To the best of my knowledge:

As per definition given in Notification No. 12/2017 CT Rate dated 28.06.2017 (as amended)

(ze) “goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called;

Issuance of a consignment note is the necessary for a supplier of service to be considered as a Goods Transport Agency. If such a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency

Individual truck/tempo operators who do not issue any consignment note are not covered within the meaning of the term GTA. As a corollary, the services provided by such individual transporters who do not issue a consignment note will be covered by the entry at s.no.18 of notification no.12/2017-CT (Rate), which is exempt from GST.

NOTE: Definition of Consignment Note is not given in GST Act or in Notification No 12/2017 CT Rate, but as per one flyer (https://www.cbic.gov.in/resources//htdocs-cbec/gst/goods_transport_service.pdf) we can take the meaning prescribed under the Explanation to Rule 4B of Service Tax Rules, 1994.

In terms of the said rule, consignment note means a document, issued by a goods transport agency against the receipt of goods for the purpose of transport of goods by road in a goods carriage, which is serially numbered, and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax whether consignor, consignee or the goods transport agency.

Therefore in your case you are requested to check if the consignment note is issued and if it is issued then the same is subject to RCM under GTA service.

Other Experts/ Seniors are requested to correct me if there is any error in this post.

[Sandeep Anand]

Dear Madam,

Your thorough explanation was helpful and provided us with the information we needed to better understand the matter at hand. Thank you for taking the time to provide such a comprehensive response.

Regards,

Sandeep

[Shilpi Jain]

GTA or truck owner.... this is the most controversial and the most favorite topic of the department officials. There are cases in favour and against as well.

Agree with what Kiran has posted, but going to the practical side of it, intimate department that you are not receiving any consignment note from the truck owner and thereby not paying GST under RCM (in case you are choosing that option) as it is not a GTA.

Else, if you are able to take credit of taxes paid under RCM, might as well pay GST under RCM take credit and stay calm.

[Amit Agrawal]

I agree with Ms. Kiran Tahelani & Ms. Shilpi Jain Mam.

[navnath padwal]

consignment note means a document, issued by a goods transport agency against the receipt of goods.

so , transporter might not issue " cosignment note/lorry receipt/bilty/goods receipt note" however he may have issued bill containing this details ,, then such bill will be considered as consignment note , then specified supplier is required to pay GST under RCM.

therefore it is always better to pay GST on transport charges under RCM and claim ITC .

please correct is wrong

[Padmanathan KV]

On practical aspects, I agree with Ld. Vaishali ma'am. It is better to pay under RCM and avail ITC of the same.

AI Summary

Hiring Lorry for Raw Material Transport: No Consignment Note Means No GST Under RCM; ITC Possible with Documentation A manufacturer inquired whether hiring a lorry for transporting raw materials to their factory falls under Goods Transport Agency (GTA) services and if Reverse Charge Mechanism (RCM) applies. An expert clarified that a consignment note is essential for a service to be classified as GTA. If no consignment note is issued, the service is not considered GTA and may be exempt from GST. Several participants agreed with this explanation, suggesting that if no consignment note is issued, the manufacturer could avoid paying GST under RCM. However, if a consignment note or equivalent documentation is provided, GST should be paid under RCM, allowing for Input Tax Credit (ITC) claims.