EXAMPLE

B Ltd. is a goods transport agency in Hyderabad which transported goods to Y whose fixed establishment is in Delhi but not liable for registration. Y has organized a stall at Suraj Kund Mela in Faridabad and taken a registration in Faridabad for a month as casual taxable person. The consideration of service of goods transport is Rs. 240000.
(a) Determine who is liable to pay GST .
(b) Determine the tax liability under GST where ITC on input of Rs 5000 and input service of Rs.8000 are available.
(c) What if Y supplies handicraft goods at Suraj Kund Mela in Faridabad.

ANSWER                                                                                                                                                                               

Services provided or agreed to be provided by a goods transport agency (GTA) in respect of transportation of goods by road is under reverse charge as approved by Council.

But the pre-condition of this reverse charge is service recipient is any of the following:-

(i) any factory registered under or governed by the Factories Act, 1948;
(ii) any society registered under the Societies Registration Act, 1860 or under any other law for the time being in force in any part of India;
(iii) any co-operative society established by or under any law;
(iv) any person registered under CGST/SGST/UTGST Act;
(v) anybody corporate established, by or under any law; or
(vi) any partnership firm whether registered or not under any law including association of persons.
(vii) Casual taxable person

(a) The service recipient is casual registered taxable person under GST, hence, Mr. Y will be liable to pay GST on reverse charge for goods supplied to him.

However According to Payment of taxation Rules, tax on reverse charge will be paid only through E-cash ledger.

(b) Tax liability under GST
Under GST no abatement is available on freight charges. Tax @ 5% on full freight amount will have to be paid with No ITC.
Thus liability of GST = Rs. 240000*5% = Rs. 12000.

(c) If Y i.e Casual Taxable Person is making taxable supplies of  Handicraft goods at Surajkund Mela,

Provided the aggregate value of such supplies does not exceed Rs. 20 lakhs in a financial year, then he is exempted from obtaining registration under the act vide notification no.32/2017-Central Tax dt. 15.09.2017.

The Reverse Charge Condition does not apply in this case. So Y is not liable to pay tax under the act.

Further GTA will also not liable to pay tax vide notification no.12 or  9 (CGST/IGST(Rate))  amended vide notification 32 or 33/2017-(IGST(Rate)) which states that Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person are exempt from tax.

So in this particular case both GTA & Mr. Y both are not liable to pay tax under the act with the effect from 13.10.2017.