Intermediary service to GTA

[Debtosh Dey]

An entity is engaged by a GTA for transportation of his client's goods. The said entity sub-contracts the job to truck owners. Is the service of the entity exempted from GST?

[Debtosh Dey]

I clarify that the entity's service may not be an intermediary service since the job was sub-contracted and there is no commission earning. It's principal-to-principal basis sub-contract to truck owners for which the entity charges to the GTA on cost plus basis.

[KASTURI SETHI]

Dear Sh.Debtosh Dey Ji,

In the title of query, you have mentioned the word, 'intermediary' ? In the query itself you have mentioned the word, 'sub-contract'. Is it really sub-contracting or outsourcing ? How cannot be intermediary ? I think the whole issue revolves around the terms, 'intermediary' 'sub-contracting' & 'outsourcing'.

Will you please re-phrase the query ?

Thanks a lot.

[GUNASEKARAN K]

Please elaborate your query...

[GUNASEKARAN K]

Please help to understand your query;

1. Who will give the freight bill / claim / reimburse the freight amount from service recipient i.e.your clients?

2. If truck owners gives freight bill to your clients then what is you role?

[Shilpi Jain]

Who issues the consignment note for the transportation?

Why do you regard service to be exempt? This is not a renting of vehicle to GTA.

[Vijay kumar]

Since the "entity" is itself not engaged in the service by way of transportation of goods by road, no exemption in my view (sl.no.18 of Nofn.12/2017-CT Rate won't apply to such intermediary). If they are charging some commission in the process, same is liable to GST under forward charge.

[Ganeshan Kalyani]

GTA may be giving service to his client. The client will be paying GST under RCM. Further, the GTA has engaged an entity who inturn sub-contracts a truck driver for the purpose of transportation of goods. The truck owner providing transportation of goods service is exempt vide serial no 18 of Notification no. 12/2017-CTR dated 28.06.2017. The legal entity getting commission (or differential amount i.e. freight charges received by legal entity from GTA and the freight amount given by legal entity to the truck owner) from GTA is liable to GST.

[Padmanathan KV]

From the limited facts, I agree with the prima facie views of expert that service of entity in question is not exempt.

AI Summary

Intermediary service: where subcontracting is principal to principal, exemption may not apply and commission is taxable under GST. Whether an entity engaged by a goods transport agency to arrange transport and sub contract to truck owners is an intermediary service under GST: where the entity subcontracts on a principal to principal, cost plus basis without commission, it is not an intermediary; the truck owner's transport service is exempt, while any commission or differential retained by the arranging entity is taxable.