Question 27: In Jan 2018 I registered a
transporter in GST. He is working with reverse charge mechanism before 15 days
he purchased a truck and paid GST. How can he take GST credit on this purchase
should he left reverse charge mechanism. Please provided full procedure.
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
Further vide Notification No. 13/2017-Central Tax ( Rate) GTA is not eligible
for reverse charge mechanism if it is opting to pay GST @ 12%.
Therefore in order to claim credit on truck purchased you have to opt out of
reverse charge mechanism and you are required to pay tax @ 12% and take credit.
(Reply dt. 06/07/2018)