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Transport of Goods and RCM

15 July 2022

A company purchase bio mass fuel from farmers. And such fuel transpoted to the company by the tractors as mean of transport. Here is the major amount of freight that is paid to transpoters.And such transporters using the Tractor Trolley as their vehicles and raise the bill to the company for their freight.whether such transporters can be classify as GTA? And rcm will be applicable on their?

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4 Replies

CA. ANKIT PANDYA (CA) (682 Points)
Replied 15 July 2022

If these tractors are owned by farmers and the transport of biomass fuel is done by the same farmers from whom biomass fuel is purchased, then in that case the principal supply is the biomass fuel and not the transport service. So invoice raised for biomass fuel in that case would be inclusive of cost of biomass fuel + transport, and HSN code will be of bio mass fuel only.

please clarify if your case is the same as explained above.

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SUKHVEER SINGH (45 Points)
Replied 15 July 2022

No in my case farmers are separate from the Transporter. Transporter issue invoice for fright only

CA. ANKIT PANDYA (CA) (682 Points)
Replied 15 July 2022

Definition of GTA in GST : "“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;"

not all transport of goods by road is by a GTA. To qualify as services of GTA, the GTA should be necessarily issuing 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.

Definition of Tractor under Motor Vehicle Act 1988,“tractor” means a motor vehicle which is not itself constructed to carry any load (other than equipment used for the purpose of propulsion); but excludes a road-roller;

While at the time of Purchase of Tractor, does not require to pay road tax as they are not expected to carry any load.

again as per central Motor Vehicle rules, 1989,

""agricultural tractor" means any mechanically propelled 4-wheel vehicle designed to work with suitable implements for various field operations and/or trailers to transport agricultural materials. Agricultural tractor is a non-transport vehicle;"

There was was amendment proposed recently to remove words non-transport vehicle from the definition of tractors which would amount to paying of tax and treating of tractors at par to commercial vehicle.

However, prima-facie it seems, that is not covered under GTA or RCM unless and until they provide consignment note.

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