Transportation

[Yogesh Khetrapal]

A registered dealer getting inward services, and using the local transportation as freight Inward, the transporter is not a GTA as it is just a Bill/ Cash Memo issued by though the name is using Transport word. In my understanding it must fall under RCM, as goods or services are being received through an unregistered dealer.

Whether the transportation charges must fall under the ambit of composite supply?

Please consider both the points separately.

Thanks,

[Sadanand Bulbule]

RCM on GTA services is applicable only when the transporter issues "Goods Consignment Note". Otherwise the recipient of mere local transport services without GC Note is not liable for RCM.

[YAGAY and SUN]

A registered dealer receiving inward transportation services from a local transporter who does not issue a consignment note and only provides a bill or cash memo is not considered to be availing services from a GTA (Goods Transport Agency) under GST. Since the definition of a GTA specifically requires the issuance of a consignment note, the transporter in this case would not fall under that category. As such, reverse charge mechanism (RCM) under GST is not applicable, because RCM in the context of transportation applies only to services provided by a GTA to certain specified recipients. Moreover, even though the transporter is unregistered, there is no RCM liability on the recipient unless they fall under a specifically notified class of persons under Section 9(4), which currently does not apply to regular registered businesses.

Additionally, these transportation charges do not qualify as a composite supply. For a supply to be considered composite, it must consist of two or more supplies naturally bundled together and provided by the same supplier in conjunction with each other, where one is a principal supply. In this scenario, the transportation service is not bundled with the supply of goods—it is billed separately by a third-party transporter and not by the supplier of the goods. Therefore, the transportation service is an independent supply and should be treated as such for GST purposes.

AI Summary

Reverse charge mechanism on local transport services not triggered where transporter does not issue a consignment note. RCM does not apply where a local transporter issues only a bill or cash memo and not a goods consignment note, so the service is not treated as GTA service attracting reverse charge; ordinary registered recipients are not liable for RCM merely because the transporter is unregistered. Separately, transportation charges invoiced independently by a third party transporter are not a composite supply with the goods and should be treated as an independent supply.