Pradeep Jain - Chartered Accountant

Query

() Posted On: 08 Sep, 2020

Hello Sir, I am availing services of CHA (Custom House Agent) for transportation of goods from Jodhpur to USA. My firm and CHA firm is registered in Rajasthan in GST regime. However, CHA is raising three separate bills for ocean freight, handling services, terminal charges, packing charges, transporting goods and similar support services. Since ocean freight is exempted in case of exports, he is issuing bill of supply in this respect. However, tax charged on the 2nd bill raised in respect of other above-mentioned services is CGST while on 3rd bill, he is charging IGST. I am little worried about the eligibility of credit. If the supplier has charged incorrect GST, then the department will ask us to reverse the credit too. Can you please confirm us about the applicability of tax under correct head for the aforesaid transactions?

Section 12 of IGST Act, 2017 provides for determination of place of supply in case both the service provider and service receiver are located in India. As per sub-section (8) of Section 12, place of supply of services by way of transportation of goods shall be the location of recipient, if registered. Integrated Goods and Services Tax (Amendment) Act, 2018 was made effective from 01.02.2019 by Notification No. 01/2019-IT dated 29.01.2019. Among other amendments, a proviso was inserted in Section 12(8) of the IGST Act. The relevant provision is extracted as under: "Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods." Before the insertion of the proviso, the place of supply for transportation services was dependent on the location of the service recipient. If the service recipient was in the same state as that of service provider, then the supply was treated as intra-state supply and if the service recipient was in a different state, then the supply was considered as inter-state supply. Due to insertion of the proviso, the place of supply for exports shall always be outside India and thus supply shall always be inter-state supply, irrespective of the location of recipient. Therefore, the CHA is correctly raising its invoices separately for the services provided from Jodhpur to border line of India and from a place outside India to factory situated in India. For the first leg of journey, since the place of supply is location of registered recipient i.e. Jodhpur and location of supplier is in Rajasthan only. Hence, he is correctly charging CGST and SGST in this respect. For another leg of journey which is outside India, the place of supply is outside India, hence IGST is chargeable. Another aspect of this query is that what should be the rate charged for the services provided? In our opinion, all the services fall under the SAC code 9967 with description ?Supporting services in transport?, hence, it will be chargeable at the tax rate of 18%. Cargo handling services, Storage and warehousing services and all the supporting services for transportation of goods are classified under 9967.

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