Case Study

ABC Ltd. is a Goods Transport Agency (GTA) having office in Haryana and Delhi. In Haryana company has availed the option to pay tax under forward charge @12% with ITC and in Delhi option to pay tax @ 5% without ITC is availed.

Following are the details provided for the month of March-20 for states of Haryana and Delhi. Read carefully and give detailed solution for the Questions.

Haryana:

Note: –

1. There was a bill amounting to ₹ 5,00,000 for transportation of Agricultural Produce and a bill of ₹ 2,00,000 for transportation of organic manure. The amount is included in above Freight Income. Both are inter-state supplies.
2. The Security Services are received from a person other than a body corporate.
3. There was a Sales Bill (Rental) of Aug-19 amounting to ₹ 20,000 (IGST 3,600) and tax for the same has not paid yet. The amount is included in above sales figure.
4. There was a bill of Repair & Maintenance amounting ₹ 25,000 (CGST 2,250 & SGST 2,250) pertaining to April 19 whose credit is not taken yet. The amount shown above is inclusive of this bill.
5. Out of total support services, Service amounting Rs. 10,00,000 are given to customers located in Gujarat and Maharashtra and others are given to customers located in Haryana itself.

The details of Income and expenses of Delhi Branch are as follows:

Delhi:

Note:

1. Out of above, the services amounting Rs. 15,00,000 are provided to local authority or governmental agencies of Delhi which has taken registration only for the purpose of deducting TDS u/s 51 and services amounting Rs. 10,00,00 are provided to MNP ltd registered in Maharashtra. Rest are services to registered person located in Delhi.

Questions:

1. Calculate tax payable -Direct Charge
2. Calculate tax payable- Reverse Charge
3. Calculate Blocked and Ineligible Credit
4. Calculate Eligible ITC before Rule 42
5. Whether ITC can be availed for the bill of April-19.
6. Calculate Reversal under Rule 42 of Haryana branch, if any.
7. Calculate Net eligible ITC of Haryana after all reversals
8. Calculate interest and late fees, if any.

Answers:

1. Calculation of tax payable – Direct charge

A Goods Transport Agency have the following three situations:

1. Providing services to specified Category Recipient – Applicability of Reverse Charge as per Notification No. 13/2017(rate).
2. Providing services to other than Specified Category Recipient – Forward Charge @5% without ITC as per Notification No. 11/2017(Rate).
3. Forward charge with ITC Availment – Forward Charge @12% with availment of ITC as per Notification 20/2017(Rate).

As Per Notification No.13/2017, Supply of Services by a Goods Transport Agency (GTA) [who has not paid central tax at the rate of 6%,] in respect of transportation of goods by road to Specified Category Recipients are treated on Reverse Charge and the Recipient is Liable to pay GST @ 5%.

(a) any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) 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

(c) any co-operative society established by or under any law; or

(d) 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

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person.

[Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, —

which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.]

However, as per exemption notification 12/2017-CT Entry 21B service provided by GTA by way of transport of goods in a goods carriage, to

which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.

Therefore, No GST will be charged on the same

Therefore, in case of Delhi, where the recipient is a Registered person, will be liable to pay tax on RCM basis and XYZ Ltd. will not be eligible for taking ITC of input services used for providing such services. However, RCM provisions will not be applicable on services provided to Body of individual and to local authority or governmental agencies and therefore company will have to discharge tax on forward charge basis and rate of tax for the same will be 5% and ITC on input services availed for providing such services will not be available.

But in case of Haryana, ABC Ltd. has opted to pay tax @ 12% with availment of ITC. Hence XYZ will be liable to pay taxes @12% with full availment of ITC, subject to other provisions related to ITC.

Further as per Notification No. 12/2017(Rate), Services provided by a goods transport agency, by way of transport in a goods carriage of Agricultural Produce and Organic Manure are exempt supplies.

Therefore, following are the taxes required to be paid for the month of March-20.

Haryana:

*Refer Answer-7 for eligible ITC

**It is assumed that balance in electronic credit ledger is zero, therefore, balance tax liability is discharged in cash.

Delhi:

2. Tax Payable: Reverse Charge: –

As Per Section 9(3) of CGST Act 2017, the Government has notified through Notification No.13/2017(rate) that if in case the services are provided by way of security services by a person other than a body corporate to a registered person located in the taxable territory will be required to pay tax on reverse charge.

In the present case ABC Ltd. being a registered person located in taxable territory has received Security services from a non-body corporate will be liable to pay tax on reverse charge basis.

RCM Liability is as under:

3. Calculation of Blocked and Ineligible Credit:

Haryana

As Per Section 17(5) Foods and Beverages are classified as Blocked Credit.

Delhi

As the company has opted to pay tax @5% whole amount of ITC will be ineligible.

4. Calculation of Eligible ITC (before reversal under Rule 42) :

 Haryana

5. Availability of ITC of April -19

 As per Section 16(4) of CGST Act,2017, A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Therefore, in given case ABC Ltd. can take ITC of the bill of April-19 up to the date of filing of return for the month of September 2020.

6. Calculation of Reversal under Rule 42.

As Per Section 17(2) of CGST Act, 2017, Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

Haryana

*It is assumed that no inward supplies are used for non-business purpose therefore Value of D2 is zero.

7. Calculation of Net eligible ITC after all reversals

 Note: ITC on Truck purchased has not been reversed under Rule 43 of CGST Rules, 2017 as the such truck are given on rental to a party in Gujarat which is a taxable supply.

8. Calculation of late fees and interest, if any.

As per Section 50(1), Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent.

Interest= 3600*{(20-04-2020) -(20-09-2019)}/365*18% =Rs. 378