TaxTMI 
TaxTMI 
RCM applicability on Cotton Freight
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....CM applicability on Cotton Freight<br> Query (Issue) Started By: - Balakrishnan Ramalingam Dated:- 13-3-2019 Last Reply Date:- 30-8-2019 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>My clients Spinning Mills are paying Lorry Freight payment for purchase of Cotton - Inter State. Please clarify whether RCM is applicable under GTA for the above Lorry Freight Payment? Reply By Rajagopalan ....
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....Ranganathan: The Reply: Sir, You have to pay GST on freight under reverse charge if you procure cotton from agriculturist vide Sl. No. 4A of Notification No. 4/2017-Central tax (Rate) dated 28..6.2017 as amended. Reply By Balakrishnan Ramalingam: The Reply: Sir, I am refering about Freight on Cotton purchase (GTA) and not cotton per se. The amendment notification as below applies only for Cot....
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....ton purchase from Agriculturist. But in my case, Cotton is purchased from Ginners/Traders. "4A. 5201 Raw cotton Agriculturist Any registered person". Thanks for the reply Reply By Rajagopalan Ranganathan: The Reply: Sir, If a consignment note issued by your transporter then you have to pay GST under reverse charge. If no consignment note is issued no GST is payable on freight charges vide Sl.....
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.... No. 18 of Notification No. 12/2017-Central Tax (Rate) date 28.6.2017 as amencded. Reply By KASTURI SETHI: The Reply: Here we are discussing GTA service for transportation of Cotton and NOT raw cotton. (Raw cotton is under RCM as goods and cotton). (1) No doubt issuance of consignment note is legal requirement as GTA but at the same time non-issuance of consignment note cannot be adopted as mod....
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....us operandi. (2) If any agricultural produce is subjected to process (by cultivator or producer) which alters the basic character of the same, that would fall out of definition of agriculture produce. For example : jaggery, Sugar etc.In this scenario and GST is applicable. (3) if we treat cotton as agricultural produce, no GST is applicable under RCM. It is exempted vide serial No.21 of Notific....
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....ation No.12/17-CT(Rate) dated 28.6.17 as amended. (4). In my view, raw cotton is agricultural produce and cotton is not agricultural produce inasmuch as Raw cotton is subjected to various processes before being converted into cotton through machines. (5) There is a lot of difference between both. Raw cotton contains seeds, impurities etc. whereas cotton gains fine shape after ginning. Raw cotton....
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.... is linked with the farmer/cultivator and cotton is with the trader. (6) The purpose exemption notification is to provide benefit to the farmer/cultivator. It is pertinent to gh through the definition of 'Agriculture Produce' as per clause 2(d) of the Notification No. 12/2017-C.T. (Rate), dated 28-6-2017 which is as under - "agricultural produce" means any produce out of cultivation of ....
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....plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; So in view of above, cotton does not fall ....
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....under RCM as goods and GST on the amount of freight paid for transportation of cotton purchased is applicable and is to be paid by the recipient under RCM as GTA service received. Lawfully and practically, a registered person who bears the freight pay GST. Such was the situation in pre-GST era. These are my views. Reply By RAMPRADEEP HARIHARASHARAMA: The Reply: VERY USEFUL INFORMATION<br> Disc....
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