Chapter Thirty Eight

Goods Transport Agency in

GST
Background of levying tax on the services of Goods
Transport Agency
The levy of Service Tax on Road Transportation Service has
always been a contentious issue. The Finance Act, 1997 had
levied Service Tax on Goods Transport Operators w.e.f. 16-
11-1997 which was subsequently withdrawn after nation-
wide strike. Thereafter by the Finance (No. 2) Act, 2004
Service Tax was imposed on Transport of Goods by Road
service rendered by a goods transport agency with effect from
10-09-2004. However, the levy was deferred until further
notice again in view of transporters’ strike. The Government
thereafter constituted a Committee to deal with the issue
and after taking into account the recommendations of the
Committee, Notification Nos. 32 to 35/2004 – ST all dated
03-12-2004 were issued, levying tax on Transport of Goods
by Road with effect from 01-01-2005.
The legal position prevailing under Service Tax is being
continued under the GST regime. The services of
transportation of goods by road (except services of GTA)
continue to be exempt even under the GST regime. In

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so far as the services of GTA is concerned, if the services

(of Goods Transportation) are provided (by the GTA) to
specified classes of persons, the tax liability falls on such
recipients under the reverse charge mechanism. The
following discussion will clarifythe position.

Transportation of Goods by Road

In terms of Notification no. 12/2017-Central Tax (Rate)
dated 28.06.2017 (sr.no.18), the following services are
exempt from GST
Services by way of transportation of goods (Heading 9965)-
(a) by road except the services of—
(i) a goods transportation agency;
(ii) a courier agency;

(b) by inland waterways.

Thus, it is to be seen that mere transportation of goods by
road, unless it is a service rendered by a goods transportation
agency, is exempt from GST.
Who is a GTA – Goods Transport Agency?As per Section
65B (26) of the Finance Act, 1994; “Goods Transport
Agency means any person who provides service in relation
to transport of goods by road and issues consignment note,
by whatever name called”. Therefore, in the Service Tax
regime, issuance of Consignment Note (C/N) was integral
and mandatory requirement before any road transporter
could be brought within the ambit of GTA.

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Position under GST

Under GST laws, the definition of Goods Transport Agency
is provided in clause (ze) of notification no.12/2017-Central
Tax (Rate) dated 28.06.2017.
(ze) “goods transport agency” means any person who
provides service in relation to transport of goods by road
and issues consignment note, by whatever name called;
Thus, it can be seen that issuance of a consignment note is
the sine-qua-non for a supplierof service to be considered
as a Goods Transport Agency. If such a consignment note
is not issued by the transporter, the service provider will
not come within the ambit of goods transport agency. If
a consignment note is issued, it indicates that the lien on
the goods has been transferred (to the transporter) and the
transporter becomes responsible for the goods till its safe
delivery to the consignee. It is only the services of such
GTA, who assumes agency functions, that is being brought
into the GST net. Individual truck/tempo operators who
do not issue any consignment note are not covered within
the meaning of the term GTA. As a corollary, the services
provided by such individual transporters who do not issue
a consignment note will be covered by the entry at s.no.18
of notification no.12/2017-Central Tax (Rate), which is
exempt from GST.

What is a consignment note?

Consignment Note is neither defined in the Act nor in the
notification no.12/2017-Central Tax (Rate). Guidance can
be taken from the meaning ascribed to the term under the

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Explanation to Rule 4B of Service Tax Rules, 1994. In

terms of the said rule, consignment note means a document,
issued by a goods transport agency against the receipt of
goods for the purpose of transport of goods by road in a
goods carriage, which is serially numbered, and contains the
name of the consignor and consignee, registration number
of the goods carriage in which the goods are transported,
details of the goods transported, details of the place of origin
and destination, person liable for paying service tax whether
consignor, consignee or the goods transport agency.

Charge of GST on services provided by GTA

In terms of notification no. 11/2017-Central Tax (Rate)
dated 28.06.2017 as amended by notification no. 20/2017-
Central tax (Rate) dated 22.08.2017 , sr.no. 9 and sr. no. 11,
(i) Services of goods transport agency (GTA) in relation to
transportation of goods (including used household goods
for personal use) (Heading 9965 &9967 respectively)
attracts GST @2.5% or 6% CGST. Identical rate would be
applicable for SGST also, taking the effective rate to 5% or
12%. However, the rate of 5%is subject to the condition
that credit of input tax charged on goods or services used in
supplying the service has not been taken. The Explanation
to the notification further clarifies that it shall mean that,-
(a) credit of input tax charged on goods or services used
exclusively in supplying such service has not been taken;
and (b) credit of input tax charged on goods or services used
partly for supplying such service and partly for effecting
other supplies eligible for input tax credits, is reversed as
if supply of such service is an exempt supply and attracts

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provisions of sub-section (2) of section 17 of the Central

Goods and Services Tax Act, 2017 and the rules made
thereunder.
GST @ 6% CGST (12% cumulative) is subject to the
condition that the goods transport agency opting to pay
central tax @ 6% under this entry shall, thenceforth, be
liable to pay central tax @ 6% on all the services of GTA
supplied by it. Further, there is no restriction on the GTA
from taking ITC if this option is availed.
Thus, where the GTA is not eligible to take ITC for the
supplies effected by it and the liability under GST is
discharged under reverse charge basis, the recipient of GTA
service discharging the tax liability is entitled to take Input
Tax Credit (ITC) of the amount of tax paid under reverse
charge, provided it is used in the course or furtherance of
business at his end. Further the recipient would be eligible
for ITC of the GST paid by GTA on forward charge basis.
Notification no. 11/2017-Central Tax (Rate), sr.no.11, (ii)
also provides that supporting services in transport other than
those mentioned in (i) (Heading 9967) would attractGST
@9% CGST. Identical rate would be applicable for SGST
also, taking the effective rate to 18%. Similar rate has been
prescribed for services falling under heading 9965 in terms
of notification no. 11/2017-Central Tax (Rate), sr.no. 9 (v).

Person Liable to Pay GST on GTA services

The liability to pay GST devolves on the recipientsfor
supply of services by a goods transport agency (GTA) who
has not paid central tax at the rate of 6%, in respect of

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transportation of goods by road (in terms of notification no.

13/2017-Central Tax (Rate) dated 28.06.2017 (sr.no.1) as
amended by notification no. 22/2017-Central Tax (Rate)
dated 22.08.2017, if the recipients (located in the taxable
territory) belong to the following category:
(a) Any factory registered under or governed by the
Factories Act, 1948(63 of 1948); or
(b) any society registered under the Societies Registration
Act, 1860 (21 of 1860) or under any other law for the
time being in force in any part of India; or
(c) any co-operative society established by or under any
law; or
(d) any person registered under the Central Goods and
Services Tax Act or the Integrated Goods and Services
Tax Act or the State Goods and Services Tax Act or
theUnion Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f ) any partnership firm whether registered or not under
any law including association of persons; or
(g) any casual taxable person.
Thus in cases where services of GTA are availed by the
above categories of persons in the taxable territory the
GTA supplier has the option to pay tax (and avail ITC)
@12% (6% CGST + 6% SGST);and if the GTA does not
avail this option, the liability to pay GST will fall on the
recipients. In all other cases where the recipients do not fall

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in the categories mentioned above, the liability will be on

the supplierof GTA services.

GTA services specifically exempt

In terms of notification no.12/2017-Central Tax (Rate)
dated 28.06.2017 (sr.no.21), the following services provided
by a GTA (Heading 9965 or 9967) is exempt from payment
of tax:
Services provided by a goods transport agency, by way of
transport in a goods carriage of -
(a) agricultural produce;
(b) goods, where consideration charged for the
transportation of goods on a consignment transported
in a single carriage does not exceed one thousand five
hundred rupees;
(c) goods, where consideration charged for transportation
of all such goods for a single consignee does not exceed
rupees seven hundred and fifty;
(d) milk, salt and food grain including flour, pulses and
rice;
(e) organic manure;
(f ) newspaper or magazines registered with the Registrar
of Newspapers;
(g) relief materials meant for victims of natural or man-
made disasters, calamities, accidents or mishap; or

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(h) defense or military equipments.

Similarly, the following services received by the GTA
(Heading 9966 or 9973) is also exempt in terms of
notification no.12/2017-Central Tax (Rate) dated
28.06.2017 (sr.no.22)

Services by way of giving on hire –

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(b) to a goods transport agency, a means of transportation
of goods.
Thus, if the GTA hires a means of transportation of goods,
no GST is payable on such transactions.

Significance of the term ‘in relation to’ in the definition

of GTA
The use of the phrase ‘in relation to’ has extended the scope
of the definition of GTA. It includes not only the actual
transportation of goods, but any intermediate/ancillary
service provided in relation to such transportation, like
loading/unloading, packing/unpacking, trans-shipment,
temporary warehousing, etc. If these services are not
provided as independent activities but are the means for
successful provision of GTA Service, then they are also
covered under GTA.

Conclusion
The above discussion shows that not all transport of goods

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by road is by a GTA. To qualify as services of GTA, the

GTA should be necessarilyissuing a consignment note.
Only services provided by a GTA are taxable under GST.
Services of transportation of goods by a person other than
GTA are exempt. Moreover, in cases where the service of
GTA is availed by the specified categories of persons in the
taxable territory, the recipients who avail such services are
the ones liable to pay GST and not the supplier of services
unless the GTA opts for collecting and paying taxes @ 12%
(6% CGST + 6% SGST). In all other cases where GTA
service is availed by persons other than those specified,
the GTA service supplieris the person liable to pay GST.
The GTA service supplieris not entitled to take ITC on
input services availed by him if tax is being charged @ 5%
(2.5% CGST + 2.5% SGST). In case the GTA service
supplierhires any means of transport to provide his output
service, no GST is payable on such inputs.
In a nutshell, the GST law continues the provisions prevailing
under the Service Tax regime. The law recognises that pure
transportation of goods services are mostly provided by
persons in the unorganised sector and hence has specifically
excluded such operators from the tax net. In respect of those
who provide agency services in transport, the liability is cast
on the recipients in most of the cases or unless option to pay
under forward charge has been exercised by the GTA.

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