GST on amount received from C&F agent

[Deepak Kumar]

Dear Experts

If a Cement dealer is getting some income in his 26As from a C&F agent under 194C, is it taxable?

The said amount has been shown as Transportation income also in P&L account.

Yes, the dealer is not a GTA.

Dealer is getting this amount towards reimbursement of transportation cost.

On emergency, the dealer has arranged his own lorry to transport the goods from C&F agent warehouse to his place. Since he has born the cost of transportation on behalf of C&F agent, C&F agent has reimbursed this cost to him.

Is it taxable under GST?

The dealer does not have any invoice relationship with C&F agent.

Goods invoicing is direct between the dealer and Cement company. The cement company has appointed the C&F agent for warehousing, logistics support etc.

[Shilpi Jain]

On the transportation expense incurred has the dealer paid GST under RCM?

[Shilpi Jain]

For levying GST on the income accounted, the nature has to be ascertained. In the present case, the agreement with C&F has to be seen and if transportation was in his scope, ideally the C&F should have charged GST on the amount including transportation services.

[Deepak Kumar]

Here, In cement industry, goods are inclusive of freight. So, Dealer have paid the freight at the time of purchase.

For transportation, the cement company appoints C&F agent. So, C&F agent does the transportation on behalf of the company and raises the invoice to the company. (yes, here he is working as Pure Agent). He is not charging anything from the dealer.

However, some times, when C&F agent express his un-availibility to transport the goods from his godown to dealer's place, then he requests dealer himself to arrange his own vehcile to lift the goods . In this case, the dealer has lifted the goods from C&F agent's godwon and incurred some expenses. These expenses are towards freight only either from his own lorry or hired lorry (Non-GTA). These expenses have been reimbursed by the C&F agent calculated per cement bag basis.

Now, at the time of reimbursment, C&F has deducted TDS under 194C (which is not correct as per some High court judgment also). So, whether this income become taxable under GST for dealer?

[Shilpi Jain]

Get the transpoter issue invoice on C&F for the transport charges. No liabiltiy on dealer as he is only making and getting payment.

[Sadanand Bulbule]

 From the cumulative reading of all the queries, it is clear that, there is no supply of service. Hence it is outside the domain of Section 7.

[KASTURI SETHI]

Why the dealer has shown reimbursement of transportation cost as income in P & L Account  ? How reimbursement can be income  in this scenario ?  Was the dealer not aware of the concept of re-imbursement ?  

[Deepak Kumar]

Thanks for the replies.

Here, in these transactions, the dealer himself is a temporary transporter for his own goods. Since, transportation cost has already been paid to the Cement Company on FOR basis. As invoice value is inclusive of freight. Later on, after invoicing, as per the agreement between C&F and the Cement Company, the C&F agent has to transport the goods/cement to Dealer premises and C&F agent will bill to Cement Company for the transportation.

Now, here, when in some cases, the C&F agent, does not have the truck to send the goods to dealer premises, he asks dealer himself to arrange his own lorries to carry his (Dealer's) goods. So Dealer lifts the goods from C&F agent from his own lorries. Since, the dealer has already paid the inward freight to Cement company bases in purchase invoice. This temporary arrangement would be additional burden to him. Hence, C&F agent reimburses this cost to Dealer.

Yes, Kasturi sir is right here. this should not be mentioned as additional income here, as its a reimbursement of the cost. As per my view. income in 26AS should be exempted from GST as no services were provided to them. further, even if the dealer shows this as transportation income. As per which section its taxable under GST. Services by way of transportation of goods by road is exempted (for other than GTA). Here, Dealer is not a GTA.

[KASTURI SETHI]

Income mentioned in Form 26AS cannot be treated as exempted from GST. Such income is subject to verification of the Books of Account maintained by the registered person..

Examination of Form 26AScan result in detection of tax not paid/short paid.

[KASTURI SETHI]

A   C & F Agent is the best example of pure agent. This aspect should also be kept in mind while arriving at decision in such scenario.

AI Summary

Reimbursement of transportation costs may not be a taxable supply under GST if supported as pure reimbursement and not a service. Whether amounts reimbursed by a C&F agent to a dealer for transport are taxable under GST turns on substance: reimbursements made without mark-up and supported by transporter invoices and contractual allocation of freight liability are not consideration for supply and thus do not attract GST, whereas amounts treated as transport services rendered by the dealer, invoiced or recorded as income, are consideration and taxable; documentary evidence and books of account control the classification.