Page 5 - Chap2 RCM

Transportation of flour by 55,000 Nil Services provided by GTA by way of transport (in a
GTA goods carriage) of flour are exempted from GST

Transportation of butter by 35,000 1,750 Though services provided by GTA by way of
GTA transport of milk is exempt from GST, road transport
of butter will not be exempted as butter is milk
product and not milk.
GST is payable by XYZ Ltd. under reverse charge in
terms of section 5(3) of the IGST Act, 2017

Transportation of baking 1500 75 GST is payable by XYZ Ltd. under reverse charge in
powder by GTA terms of section 9(3) of the CGST Act, 2017
Transportation of biscuits by 40,000 2,000 GST is payable by XYZ Ltd. under reverse charge in
GTA to sister concern terms of section 5(3) of the IGST Act, 2017

Total tax payable by XYZ Ltd. 43,435 -
on availing services of
different transporters

ii) Computation of GST charged on transportation cost billed by XYZ Ltd. to its customers :-
Legal Provision :- As per sec 8(a) read with sec 2(30) of CGST act 2017, The tax liability on a composite
supply shall be treated as a supply of such principal supply.
Since XYZ Ltd. is supplying biscuits on FOR basis, the service of transportation of biscuits gets bundled with
the supply of biscuits. Thus, the supply of biscuits and transportation service is a composite supply, chargeable
to tax at the rate applicable to the principal supply (biscuits) i.e.,12%.

Particulars Freight GST Paid on Freight billed (With GST
paid (`) freight (`) mark-up@ 2% on Charged
[A] [B] [A] +[B]) (`) @ 12 % (`)

Transportation of biscuits in a local minivan 54,000 55,080 6,610
belonging to an individual

Transportation of biscuits by Indian Railways 3,17,000 15,850 3,39,507 40,741
Transportation of biscuits by GTA 3,00,000 15,000 3,21,300 38,556
Transportation of biscuits by GTA @12 % 73,000 8,760 83,395 10,007

Total tax charged by XYZ Ltd. On 95,914
transportation cost billed to the customers*
*Note: It has been assumed that there is no mark-up on transportation cost billed to sister concern (non-
customer).

Services by Advocate

Q.2: Vakil & Vakil, a firm of lawyers rendered legal advice to B & Co., an architect, and MNO Ltd, an
advertising agency during October, 20XX. Both B & Co. and MNO Ltd. are not entitled for threshold
exemption in the said financial year. Who is liable to pay GST in this case?
Will your answer be different if B & Co. and MNO Ltd. sought legal advice from Mr. A, a lawyer?
Answer:- Legal Provision:
Ü As per section 9(3) of CGST Act 2017, if legal services are provided by an individual advocate or a firm of
advocate including a senior advocate to any business entity located in the taxable territory, then the GST is
payable on reverse charge basis by recipient.
Discussion & Conclusion:
Ü In the given case, as the services are provided by firm of lawyers Vakil & Vakil to MNO ltd and B & Co. a

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