Does GTA Services fall under Notification No.8/2017-Central Tax (Rate)?

Before we go and conclude on the topic “Does GTA Services fall under Notification No.8/2017- Central Tax (Rate)” first let’s understand what is reverse charge? where it is applicable along with in which cases it is exempted.

In the normal course of business, taxes are paid by the recipient of goods or services or both to the supplier of goods or services or both and the supplier, in turn, remits the amount of tax collected to the respective tax authorities. In case of reverse charge, the recipient will pay on behalf of the supplier of goods or services or both.  This is clearly defined in sub-section 98 of Section 2 of CGST Act

“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;

The category of goods or services on which reverse charge is applicable is clearly defined sub-section (3)  of section 9 of CGST Act

The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

 Sub-section (4)  of section 9 of CGST Act defines clearly states that in case of supply of goods from unregistered taxpayers, the recipient should pay taxes.

The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Notification No.4/2017-Central Tax (Rate), clearly gives the list of goods on which reverse charge is applicable.

RS on Goods1

RS on Goods2
RS Goods_2

Notification No. 13/2017- Central Tax (Rate) provides the list of services under which reverse charge is applicable on the list of services under CGST Act.

RS Services 1

RS Services 2

From the above two notifications, it is clear that Reverse charge is applicable on all inward supplies of goods and services. Previously Reverse Charge was applicable only for the services and now under GST it is applicable for the goods also. As GST is a new and taxpayers who are registered under VAT in the erstwhile regime may or not may not be aware in all the states. In order to provide some ease of doing business, the government has given some exemptions for the applicability of Reverse Charge on inward supplies wide Notification No.8/2017-Central Tax (Rate), the same is given below

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the central tax leviable thereon under sub-section (4) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017):

Provided that the said exemption shall not be applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds five thousand rupees in a day.

Now in the trade, one question which is asked very frequently is that is reverse charge exemption applicable on services like GTA, hamali charges or other freight charges paid by the taxpayers on day to day basis?

If we go through Notification No.8/2017-Central Tax (Rate), it is given for all the inwards supplies from unregistered tax payers by a registered taxpayer. So the above question does not arise that. If the inward supplies based on the above are below Rs 5000 in a day, then reverse charge is not applicable and benefit of the said notification can be taken.

If you have any different view, please share your views in the comments section so that it will be helpful for coming to a common understanding.

GST Tip – 308

As per section 29 of the CGST Act at the time of cancellation of registration, the taxpayer has to reduce the input tax credit claimed at rate of 5% per quarter on the capital goods, plant, and machinery.

GST Tip – 307

As per Section 29 of the CGST Act,  The cancellation of registration shall not affect the liability of the tax payer to pay tax and other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any period prior to the date of cancellation whether or not such tax and other dues are determined before or after the date of cancellation.

GST Tip – 306

As per Sub-section 2 of section 29 of the CGST Act, any person who has taken registration voluntarily and has not commenced his / her business within 6 months from the date of issue of the registration, the proper officer can cancel such registration.

GST Tip – 305

As per Sub-section 2 of section 29 of the CGST Act, the proper officer may cancel the registration of the taxpayer who is registered under composition scheme if he has not furnished returns for three consecutive tax periods

GST Tip – 304

As per Sub-section 2 of section 29 of the CGST Act, the proper officer may cancel the registration of a tax payer who is not registered as composition tax payer if he has not furnished returns for a continuous period of six months.

Blocked Input Tax Credit

Subsection 5 of Section 17 of the GST Act gives the list of items on which GST is not eligible

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection
(1) of section 18, input tax credit shall not be available in respect of the following,
namely:—
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles
or conveyances;
(ii) for transportation of goods;

(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where an inward supply of goods or services
or both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as
an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an
employer to provide to its employees under any law for the time being in
force; or
(B) such inward supply of goods or services or both of a particular
category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as part of a
taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or
home travel concession;
(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for further
supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including
when such goods or services or both are used in the course or furtherance of business.
Explanation.––For the purposes of clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations or repairs,
to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10;
(f) goods or services or both received by a non-resident taxable person except
on goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.