Know more about GST

—By CA Pathik Shah

The process of calculating and managing E-way bill validity for multimodal transportation by road, rail/air/sea and road
The process of calculating and managing E-way bill validity for multimodal transportation is as follows:

* The validity of an E-way bill for multimodal transportation, such as a combination of road, rail and sea, is calculated based on the total distance to be covered.

 

* Calculate the entire distance from the origin to the destination, regardless of transport modes used (road/rail/sea/air).

* As per GST rules, the validity is one day for every 100 km or part thereof. For example, if the total distance is 2,200 km, the E-way bill will be valid for 22 days. 

* The validity period begins when the first leg of the journey starts by road, which is when Part-B of the E-way bill (containing vehicle details) is first filled. 

* If the mode of transport changes to rail, air or sea, the E-way bill validity is temporarily paused during that segment. It resumes once the goods are again moved by road and new vehicle details are updated in Part-B.

* It’s important to update the mode of transport and relevant document numbers (like bill of lading or railway receipt) at each stage of the journey. 

*  If there’s a delay and the validity is about to expire, the transporter or consignor should extend the E-way bill before it lapses. 

*  Accurate and timely updates on the E-way bill portal are essential for ensuring compliance and avoiding penalties during multimodal movement.

Applicability of GST on renting storage space for imported agricultural commodities after Customs clearance, and the classification under GST law 

* The service of providing rented storage space for imported agricultural commodities, once Customs clearance is completed, is taxable under the Goods and Services Tax (GST) regime. Such activity is considered as renting of immovable property, and not as a storage or warehousing service. 

* Under GST law, a clear distinction exists between “storage or warehousing services” and “renting of storage premises.” Storage or warehousing services generally involve additional responsibilities such as loading, unloading, stacking, maintaining inventory, providing security and offering insurance. 

* These additional services reflect active management and handling of the goods stored. On the other hand, when a party merely rents out a storage space without providing any such supporting services, the activity is treated as leasing of non-residential property.

* In the scenario where storage space is given on rent for imported agricultural goods, and the lessee handles all the storage-related activities themselves, it is classified under Service Accounting Code (SAC) 997212 — “Rental or leasing services involving own or leased non-residential property.” This classification attracts GST at the standard rate of **18%** (9% CGST and 9% SGST for intra-state transactions or 18% IGST for inter-state transactions).

* It is important to note that the GST exemption for storage and warehousing of agricultural produce is available only when the goods stored are unprocessed agricultural produce and the services are provided directly by the warehouse owner. Moreover, this exemption generally applies to domestically grown produce, not to imported agricultural goods.

* Therefore, when a business rents storage space for imported agricultural commodities without providing ancillary services, it must charge GST at 18%, and can claim input tax credit for any GST paid on the leasing or renting of the property used for providing such storage.

*This has been pronounced in an advance ruling in the case of M/s Rishi Shipping – advance ruling No. GUJ/GAAR/RULING/2018/4.

GST implication on rentals of heavy lift equipment like cranes and forklifts 

Renting heavy lift equipment such as cranes and forklifts is subject to GST. Here’s a breakdown:

Nature of Supply

*  Renting of heavy machinery, including cranes and forklifts, is classified as a supply of service under GST as per Section 7 of the CGST Act.

* Whether operated or non-operated (bare rentals), these are treated as taxable supplies if carried out in the course or furtherance of business.

Taxability and Rates

* As per GST laws and relevant clarifications, equipment rental services fall under SAC 9973 (Leasing or rental services without operator) or SAC 9966 (Rental services with operator).

* The GST rate applicable is 18%.

Input Tax Credit (ITC)

*  ITC can be claimed on inputs and input services used for providing such rental services, provided they are not blocked under Section 17(5) of the CGST Act.

Therefore, businesses renting out or availing such equipment services should be registered under GST and comply with tax invoicing, returns, and ITC norms. 

(CA Pathik Shah, Chartered Accountant, L.L.B, is Partner at B P Shah & Co. and Founder, Subsidyandloan.com. Having more than 15 years of experience, he has conducted seminars on topics including types of financing options, government incentives and subsidies, and GST in various forums and companies. He is also the author of “Hand Book on Goods and Service Tax”, featuring specific industry provisions and issues.)
 

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