Page 4 - Chap2 RCM

02.Section 9(3):- RCM for notified supply of goods or services (RCM for notified supply of
goods is N.A.)
Transportation of Goods by Road by GTA:- (GTA +RCM + Exemption)

Q.1: XYZ Ltd., New Delhi, manufactures biscuits under the brand name 'Tastypicks'. Biscuits are supplied
to wholesalers and distributors located across India on FOR basis from the warehouse of the company
located at New Delhi.
The company uses multiple modes of transport for supplying the biscuits to its customers spread
across the country. The transportation cost is shown as a line item in the invoice and is billed to the
customers with a mark-up of 2% on total amount of freight paid (inclusive of taxes).
Flour used for the production process is procured from vendors located in Madhya Pradesh on ex-
factory basis. The company engages goods transport agencies (GTA) to transport the flour from the
factories of the vendors to its factory located in New Delhi.
The company has provided the following data relating to transportation of biscuits and flour in the
month of April 20XX:

S.No. Particular Amount
1 For sales within the NCR region (` 20,00,000) ` 54,000.
The company arranged a local mini-van belonging to an individual and paid him

2 For sales to locations in distant States (` 1,78,00,000), the company booked the goods by Indian ` 3,17,000.
Railways and paid rail freight

3 For sales to locations in neighbouring States (` 55,00,000), the company booked the goods by road ` 3,73,000
carriers (GTAs) and paid road freight [Out of the total sales to neighboring States, goods worth
` 10,00,000 were booked through a GTA which paid tax @ 12%. Freight of ` 73,000 was paid to
such GTA. ]

4 For purchase of flour from Madhya Pradesh (` 25,00,000), the company booked the goods by a ` 55,000.
GTA and paid road freight

5 For purchase of butter from Punjab (` 15,00,000), the company booked the goods by a GTA and ` 35,000.
paid road freight
For local purchase of baking powder, the company booked the goods by a GTA in a single carriage and ` 1,500
6
paid road freight

7 For transferring the biscuits (open market value - ` 4,00,000) to one of its sister concern in Rajasthan, ` 40,000.
the company booked the goods by a GTA and paid road freight
(i) Based on the particulars given above, compute the GST payable on the amount paid for transportation
by XYZ Ltd. when it avails the services of different transporters.
(ii) Compute the GST charged on transportation cost billed by the company to its customers.
Note: - Assume the rate of GST on transportation of goods and biscuits to be 5% and 12% respectively
[except where any other rate is specified in the question]. [RTP Nov 18]
Answer:- i) Calculation of GST on Transportation service availed :-

Particulars Freight (₹) GST Payable Reason
Transportation of biscuits in 54,000 Nil Only the transportation of goods by road by a GTA is
a local mini van belonging to liable to GST. Therefore, transportation of goods by road
an individual otherwise than by a GTA is exempt from GST
Transportation of biscuits by 3,17,000 15,850 GST under forward charge

Indian Railways
Transportation of biscuits by 3,00,000 15,000 GST is payable by XYZ Ltd. under reverse charge in
GTA terms of section 5(3) of the IGST Act, 2017

Transportation of biscuits by When the GTA pays tax @ 12%, tax is payable by the
73,000 8,760
GTA @ 12% GTA under forward charge and not by the recipient
under reverse charge
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