The Central Board of Indirect Taxes and Customs (CBIC) has clarified that loading, unloading and ancillary services provided by Good Transport Agencies ( GTAs ) during the transportation of goods should be treated as part of the composite supply of transport services. The board issued the circular on 11th October 2024.
Various representations received from stakeholders seeking clarity on whether services such as loading, unloading, packing, unpacking, transshipment, and temporary warehousing should be classified as part of the composite supply of GTA services or if they should be treated as separate, independent supplies.
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Concerns arose particularly as enforcement agencies began demanding GST payments at the rate of 18% on these ancillary services. They based their claims on an interpretation of the FAQs issued by the CBIC, specifically the last paragraph of Question No. 6, which states that if such incidental services are provided as separate services and charged separately, they would be classified as independent supplies.
Consequently, if a GTA lists charges for packing, loading, or unloading separately on an invoice, enforcement agencies have interpreted this to mean that these services should be subjected to the 18% GST rate, categorizing them as cargo handling services. This led to confusion and apprehension among GTAs regarding their tax liabilities and the classification of their services.
Thus, according to the 54th GST council recommendations, the CBIC clarified that ancillary services provided by GTAs during the transportation of goods should be treated as part of the composite supply of transport services.
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Furthermore, the CBIC emphasized that the method of invoicing employed by GTAs will generally not affect the classification of these services as composite supply. This means that even if a GTA opts to itemise charges for ancillary services on their invoice, it does not alter the fundamental nature of these services as part of the overall transport service.
However, the clarification also includes an important caveat: if ancillary services are provided outside the course of transportation and are invoiced separately, then they will not be classified as part of the composite supply of transport services.
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