Petrol bunk also giving transport service - whether liable for GST collection

[Jayachandra S And Co]

A petrol bunk is registered under GST and also owning a truck which they use to bring fuel from the IOCL only for their bunk and IOCL is giving hire charges and they are paying RCM @5%. Now the question is, being a registered dealer, should the petrol bunk charge 18% GST under FCM method?

[Sadanand Bulbule]

 Definition of GTA:

As per Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, Explanation (a): “Goods Transport Agency” means any person who provides service in relation to transport of goods by road and issues a consignment note, by whatever name called.  Thus issue of consignment note is mandatory to qualify as GTA.

(b) Exemption for Non-GTA Road Transport. Sl. No. 18 of Notification 12/2017-CT(R): Services by way of transportation of goods by road, except the services of-

(a) a goods transport agency; or

(b) a courier agency; are exempt from GST.

Thus, if no consignment note is issued ? transport service is exempt.

(c) Reverse Charge Mechanism (RCM) for GTA- Notification No.13/2017-CT(R), dated 28.06.2017, Sl. No. 1: In case of GTA supplying services to specified recipients (including a body corporate like IOCL), the recipient of service is liable to pay GST under RCM @ 5%.

(d) Forward Charge Mechanism (FCM) Option for GTA- As per Notification No. 20/2017-CT(R), dated 22.08.2017, GTA may opt to pay GST under FCM.  But only if GTA opts for FCM and declares the same. Otherwise, RCM applies.

3. Analysis .

1. If the petrol bunk is issuing consignment note ? qualifies as GTA ? GST payable by IOCL under RCM @ 5% (Sl. No. 1, Notif. 13/2017).  Petrol bunk should not charge 18% GST.

2. If the petrol bunk is not issuing consignment note ? not a GTA ? covered under Sl. No. 18 of Notif. 12/2017 ? transport by road (other than GTA/courier) is exempt. Again, petrol bunk should not charge GST (neither FCM nor RCM).

3. Charging 18% GST under FCM does not arise, because:  Transport of goods by road (non-GTA) is exempt.  

[Sadanand Bulbule]

Dear Sir

Since petrol is not under GST yet, the product (fuel) itself is not a GST goods. But the service of transport (i.e. moving goods/fuel by road) might still attract GST under GTA provisions (if other conditions are met, especially issuing consignment note etc.).

However, even with GST-2.0 reforms, there’s no change in “fuel transport for own bunk” or “transport of petroleum products” that alters the basic GTA framework, except the rationalisation of rate of tax.--5 % tax without ITC OR 18% tax with ITC.

Just for kind information

[KALLESHAMURTHY MURTHY K.N.]

Sir,

 As per the query, the Petrol Bunk Owner transports fuel from IOCL using his own truck, but receives charges from IOCL. This amounts to "supply of service" u/s 7.

The truck owner is not liable to collect tax as per the provisions explained by Sri Sadananda Bulbule Sir. As such, IOCL is required to pay tax under RCM at the prescribed rate. If ITC is not availed, 5% of tax is payable. If ITC is availed in their transactions, a 12% rate applies.

[Shilpi Jain]

If IOCL is paying GST under RCM @5% then no further payment by bunk owner. Hope the bunk owner issues  a consignment note for the transportation of fuel. If not, better to raise in order to avoid any disputes in future.

[KASTURI SETHI]

 In this context also peruse the following FAQs issued by C.B.E. & C. and Commercial Taxes Departments of States/Union Territories on 5-1-2018 :-

Q1. I am a single truck owner-operator and I ply my truck mostly between States, carrying the goods booked for my truck by an agent; aggregate value of service which I provided exceeded twenty lakh rupees during last year. Am I supposed to take registration?

Ans. You are not liable to registration, as services provided by way of transportation of goods by road are exempt. Please refer to Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017.

Q2. I own a single truck and I rent it to a major player, who provides GTA service; should I take a registration? Does my monthly rental/lease income attract GST?

Ans. Registration is not required since services by way of giving on hire, a means of transportation of goods to a GTA are exempt from tax vide entry No. 22 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

The tax exemption is for the transportation of goods by road. In this case, it is related to the supply of service. In my view, the supply of service is not exempted. 

AI Summary

Goods Transport Agency status determines GST liability: if GTA, recipient pays under reverse charge; otherwise transport exempt. If the petrol bunk issues a consignment note, it qualifies as a Goods Transport Agency and the recipient must pay tax under reverse charge, so the bunk should not charge tax under forward charge. If no consignment note is issued, the transport falls within the exemption for road transport services other than GTA/courier and no GST should be levied. A GTA may nevertheless opt to pay tax under forward charge only by complying with the prescribed option; otherwise reverse charge or exemption rules govern liability.