Non issue of tax invoice by Registered GTA

[Murari Agrawal]

We are recipient of GTA service from a GST registered transporter who issues non tax invoice without mentioning our GST number. This Invoice does not appear in our 2B. They refuse to issue proper tax invoice. What is the remedy, should we generate self invoice for RCM although as per our understand it is required to be generated when the service is from unregistered person. Dear experts kindly advise.

[KASTURI SETHI]

For GTA services, GST can be paid by any of three persons :

(i) Consignor

(ii) Consignee

(iii) GTA

See Rule 54 (3) of CGST Rules, 2017 read with Rule 46 ibid and Explanation to Notification No. 13/17-CT (R) given below: .

Explanation.- For purpose of this notification,-

(a) The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

Thus a person who pays the freight can pay GST for GTA services.

[Murari Agrawal]

Thanks Kasturi ji, we will be paying RCM tax. Registered Service Provider is issuing non taxable invoice,  should we generate self Invoice & show in GSTR-1 to take ITC. 

[KASTURI SETHI]

In continuation of my above reply

The same legal position existed in Service Tax era. Here is an extract from Notification No. 30/12-ST dated 20.06.12 (effective from 01.07.12).

Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

The same language and the same  Explanation-1  has been carried forward   to GST regime from Service Tax Notification No.30/12-ST dated 20.06.12.

[KASTURI SETHI]

Sh Murari Agrawal Ji,

This is with reference to your query at serial no.2 dated 19.10.2024.

Have you still any doubt  ?

[Murari Agrawal]

Thanks very much Shri Kasturi Ji, I have understood that as we are paying the freight, we are liable to pay the RCM GST. My query remains that the service provider being registered, but doesn't issue tax invoice, should I generate self invoice and show in GSTR-1. This question arises as there is mention of supply from unregistered person for generating self invoice.

Please note I am not a professional, but have interest in the subject and I use these for my own business and hence some times, my queries may sound a little naive. 

[KASTURI SETHI]

Sh. Murari Agrawal Ji,

(i) Firstly, your queries are not naive. Your queries are well-drafted and thought provoking.

(ii) Please follow how you feel safe in the eyes of GST laws. No issue. I am posting my views just for discussion sake.

(iii) The words from 'unregistered to registered ' are for all the specified goods and services except here RCM Notification specifically allows a registered person who pays the freight (who bears the freight) by virtue of Explanation inserted in the Notification per se.

(iv) The purpose and significance of Explanation

"Explanation added to the notification also forms part of the notification itself and the notification has to be construed as a whole and in properly interpreting the notification, the explanation which has been added to the notification cannot be ignored. The question as to whether the explanation seeks to control the operation or the effect of the notification is indeed immaterial, as the explanation purports neither to control nor to alter but only seeks to explain. What the explanation provides is not in any way in conflict with or contrary to what the Notification No. 25/10 provides. [para 10]"--------Supreme Court in the case of COROMANDEL FERTILISERS LTD. Versus UNION OF INDIA AND OTHERS 1984 (8) TMI 80 - SUPREME COURT.

(v) An Explanation merely widens the scope of the main Section and is not meant to carve out a particular exception to the contents of main Section--Supreme Court in the case of Sonia Bhatia Vs. State of U.P. 1981 (3) TMI 250 - SUPREME COURT.

(vii) Hon'ble Supreme Court in the case of S. Sundaram Vs. Pattibhiraman - 1985 (1) TMI 306 - SUPREME COURT has observed the object of Explanation as under :-

(1) It is to explain the meaning and intendment of the Act.

(2) When there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve.

(3) To provide additional support to the dominant object of the Act in order to make it meaningful and purposeful.

(4) An explanation cannot in any way interfere with or change the enactment or any part thereof but, where some gap is left which is relevant for the purpose of preventing the mischief and advancing the object of the Act it can help or assist the true purpose and intendment of the enactment.

(5) It cannot curtail statutory right which any person under a statute has been clothed with or by becoming an hindrance in the interpretation of the same.

The explanation is superadded to clear up difficulties or obscurities.

Thus Notifications, Rules & regulations and circulars help/aid the Act.

[Tarun Agarwalla]

The issue of responsibility on the recipient to issue self invoice arises only when the GTA service provider is not a RTP. here the GTA service provider is a RP and issuing a invoice. even if the invoice not reflected in 2B of the recipient , the fact of received a invoice from the registered service provider, it self fulfils the condition. admittedly the invoice might be defective or the same might not be uploaded in the GSTR-1 or uploaded wrongly by the GTA service provider, that does not itself brings the responsibility of issuing invoice on the service recipient.

[KASTURI SETHI]

If the supplier of service issues defective invoice, that person (supplier) will face the music and NOT the service recipient. 

[Amit Agrawal]

I agree with Shri Tarun Agarwalla Ji for his views in the post at No. 7 above.

I like his post more as he has actually dealt with the issue raised by the querist in context of Section 31(2) & 31(3)(f) of the CGST Act, 2017 read with Rule 36(1) & 36(2) of the CGST Rules, 2017 and has given given specific answer to the query raised. 

If Dept. objects to ITC availed (for taxes paid by recipient under RCM) on the basis of such 'defective' tax-invoice issued by the supplier, such recipient tax-payer has got good case to defend himself judicially in given circumstances. 

P.S. Even if tax-payer raises self-invoice u/s 31(3)(f) in above situation, Dept. may still try to deny ITC on the ground that self-invoice u/s 31(3)(f) cannot be issued in the situation. Essentially, tax-payer is in needless conundrum for fault of his supplier. 

These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation.

[Shilpi Jain]

One more perspective. In today's scenario where the Govt. is at the verge of making the returns under GST as pre-filled without giving option to the taxpayer to change any figure, service providers like this GTA who do not comply the law and giving incovenience to the recipients in taking credit, would in the long run either loose business or move towards complying with the law.

[Murari Agrawal]

Thanks to all the experts for their valuable opinion. We have a compulsion of getting services from particular GTA for our business and can't change it. Paying GST on RCM is our obligation, which we have to fulfill.

In the given scenario, kindly advice whether we:-

(1) should take ITC for such payment without proper tax invoice and without it appearing in our 2B

(2) Should issue self invoice and show in GSTR-1 and take credit, or

(3) should not take ITC.

[KASTURI SETHI]

(i) The option at serial no. 2 is viable. In this way, you are not causing any loss to revenue If the supplier has committed any lapse, it does not mean you should also commit mistake.

(ii) Any law has not answer to all problems. 

(iii)  The decision of paying tax under RCM is in the interest of revenue. Thus you are complying with your statutory obligation.

This is to be read in conjunction with all my replies detailed above.

Disclaimer : These are my personal views and are not meant for any court proceedings.

[Shilpi Jain]

You could just pay tax under RCM and proceed to take credit. No requirement to issue self invoice. Non-compliance or improper compliance at GTA's end should not require you to issue self-invoice when it is not covered under a scenario stated in the law.

All that you are doing is paying tax under RCM and taking credit on a valid transaction. No loss to revenue.

[KASTURI SETHI]

When we accept that the payment of GST is to be made under RCM, self-invoice is required. Invoice and documentary evidence of payment of GST both are an absolutely must.  An invoice is the basic requirement of Section 16 (2) (a) of CGST Act read with Rule 36 (1) (b) of CGST Rules.

 Other experts are welcome to opine in the interest of visitors of this forum.

[Shilpi Jain]

Self invoice is a requirement only in case of supply by an unregistered supplier.

In this case if the supplier is registered, merely because he is not issuing a proper invoice would not trigger requirement of the recipient to issue self invoice.

You can do that out of abundant caution but not legally required and the department would not consider this as well (since time limit is extended for a self invoice case to avail credit as per one of the circulars issued recently)

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

A registered GTA  can opt for the tax rate of 5% without being liable to ITC and can transfer the liability to pay tax under RCM by the service recipient i.e., the GTA Service provider does not issue tax invoices.  The Recipient has to raise a self-invoice and pay tax @5% under RCM.

AI Summary

Reverse charge mechanism: recipient who pays freight must pay GST under RCM; preserve documentary proof to claim input tax credit. Liability to pay GST under the reverse charge mechanism for GTA services rests on the person who pays or is liable to pay freight; supplier non-compliance in issuing a proper tax invoice does not by itself transfer the obligation to issue an invoice to the recipient. Recipients must pay RCM and retain documentary evidence of tax payment and invoices to support input tax credit claims. Issuing a self-invoice is typically required only for supplies from unregistered persons, though some practitioners recommend self-invoicing as a precaution when a registered supplier issues a defective invoice.