In accordance with Notification No. 11/2017- Central Tax (Rate) dated 28th June, 2017, GST under Reverse Charge Mechanism is payable on supply of services by a goods transport agency (GTA) in respect of transportation of goods by road to-
any factory registered under or governed by the Factories Act, 1948(63 of 1948);or
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
any co-operative society established by or under any law; or
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
the Union Territory Goods and Services Tax Act; or
anybody corporate established, by or under any law; or
any partnership firm whether registered or not under any law including association of persons; or
any casual taxable person.
Further, the CBIC Schedule of GST Rates provides the following rates in respect of goods transport services by GTA: …
It must be noted that the aforesaid entries lay down respective conditions for charging different rates (whether 5% or 12%) on basis of admissibility of ITC by service provider i.e. the Goods Transport Agency (GTA).
However, as this service is also taxed under the RCM basis, such aforesaid provision leads to a lack of clarity for the rate applicable for GST Liability under RCM – 12% or 5%. Again, both the rates have conditions attached to them seeming as if the onus of such liability was on the GTA.
Since the rate – 5% is much more preferable, owing to less cash outflow & lower taxation, applying such rate gives way to another uncertainty as to whether ITC shall be available on the same to service receiver. It should be kept in mind that the conditions attached to such a rate i.e. 5% restrict the availability of ITC on the GTA (service provider).
The aforesaid uncertainty is clarified by CBIC itself.