Question

Suppose a transporter purchase a truck to provide a services to its customer for transportation of goods by road. My question is :
1. Can a transporter take ITC on truck purchased while it does billing on FCM and charged gst to its cutomers.
2. Which rate of gst it will be charged to its customer while it is taking ITC?
3. After availment of all ITC, can the transporter change its billing pettern i.e. from FCM to RCM any time during the year or next financial year?

Answer

Section 17(5) of CGST Act blocks credit on motor vehicles and other conveyances except when they are used:
(i) for making the following taxable supplies, namely:'
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;

(ii) for transportation of goods

In your case the truck is purchased for transportation of goods, hence you are eligible for credit of GST paid on truck.

However as per Notification No. 11/2017-Central Tax (Rate) vide s.no. 9(iii) for GTA, two rates are notified i.e.
5% without ITC and
12% with ITC
In your case he is taking ITC on GST paid therefore the rate of GST will be 12%.

Provided that the GTA opting to pay GST @ 12% henceforth, be liable to pay GST @ 12% on all the services of GTA supplied by it.

However there is no restriction in law for opting RCM from FCM therefore he can opt for RCM at any time during the year but all the credit balance available will lapse and ITC will required to be reversed on Capital Goods on Pro-rata basis of the period for which RCM is charged @ 5%.
Foe example the life of Capital goods for ITC is consider 5 years. Suppose the transportor claim ITC and after 2 years switch over to RCM then the credit of 3/5 of ITC is to be reversed.

(Reply dt.31/01/2019)