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Courier service as gta

Toms Abraham (Internal Audits) (215 Points)

07 February 2013

Dear Experts,

Greetings!

We are receiving bills from Courier Agencies on which service tax is being charged. Our management has decided to charge Service Tax on the basis of Reverse Charge Mechanism. I suggest that it being a Courier Agency, only TDS liability shall fall on the company side irrespective of the goods transported by road/rail/air as the same is not mentioned in the courier bill.

Please suggest how can I stand on the part of TDS liability and not on Service Tax based on some relevant case laws.

Waiting in anticipation for Experts to reply.

Regards

Toms Abraham

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6 Replies

suraj gahlout (student) (47 Points)
Replied 07 February 2013

Dear

u r right. Courier Agency service is not covered under reverse charge mechanism so there is no question of charging service tax on reverse charge basis. Kindly refer the Notificatio no. 30/2012 dated 20/6/2012.

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 07 February 2013

No reverse charge on Courier Agency services. Transportation of goods by road by a courier agency is a taxable service.

Toms Abraham (Internal Audits) (215 Points)
Replied 07 February 2013

Dear Mr. Agarwal,

How can we know that the courier agency has transported the goods through road or any other mode of transport as there will be nothing mentioned on the bill. Apart from that the agency will be charging service tax on their bill. In that case can we reverse the service tax by issuing a debit note and applying reverse charge mechanism.

Awaiting for your Reply.

Regards

Toms

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 07 February 2013

The courier agency maybe using GTA for which it wouldbe liable on reverse charge basis. As far as the company recives the courier bill it need not charge ST on reverse charge absis.

The revenue cannot say it is a GTA as far as the company is concerned. They wouldhave to approach trhe Courier agency itslef.

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Toms Abraham (Internal Audits) (215 Points)
Replied 07 February 2013

Dear Mr. Hiregange,

Thanks for your valuable reply. I would like to confirm that who will bear the burden of proof in case we opt not to pay the service tax under reverse charge mechanism on the basis of the bill provided by the courier agency. Also the definition of courier services include a point called "time sensitive material". Please explain the definition is the company while providing material to the courier agency does not specify any time limit of delivery.

Waiting in anticipation for your reply.

Regards

Toms Abraham

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 07 February 2013

Dear Mr. Abraham,

You rightly said that we know that we will never know whetehr the courier agency has transported the goods through road or any other mode of transport as there will be nothing mentioned on the bill. But then we don't need to know that.

If the service is that of Courier Agency Service, than the entire tax liability is that of the service provider and reverse charge is not applicable. Reverse charge is a statutory charge vide notification no. 30/2012 and you can not reverse the charge by issue of Debit Note. You may however take Cenvat Credit on the Service Tax mentioned in the Bill subject to other conditions.

1 Like