Transport of goods by road

A. Date of Introduction : 01.01.2005 vide Notification Nos. 33/2004-S.T, 34/2004-S.T, 35/2004- S.T., dated 03.12.2004.

B. Definition and scope of service:  

1. "Goods" has the meaning assigned to it in clause (7) of section 2 of the Sale of Goods Act, 1930 – {" goods" means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale}

2. “Goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor Vehicles Act, 1988 { "goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods}

3. “Goods transport agency” means any person who pro vides service in relation to transport of goods by road and issues consignment note, by whatever name called.

4. “Taxable Service” means any service provided or to be provided to any person, by a goods transport agency, in relation to transport of goods by road in a goods carriage.  

C. Rate of Tax & Accounting Code

D. General Points:

Notification no. 01/2006-(32/2004)Service Tax: Exempts service tax on seventy-five per cent of the gross amount charged in respect of taxable service provided by a goods transport agency to a customer,

Provided that: No Input Credit is available on Input, Input Service & on Input of Capital Goods.

Procedure for availing abatement prescribed.- An abatement of 75% in taxable service of goods transport by road is available on the condition that

a. the goods transport agency has not availed credit on inputs and capital goods used for providing taxable service and

b. has also not availed benefit of Notification No. 12/2003- Service Tax, dated 20.6.2003 (vide Notification No. 32/2004-Service Tax

Notification No. 33/2004 : exempts service tax on taxable service provided by the goods transport  agency to a customer, in relation to transport of fruits, vegetables, eggs or milk by road in a goods carriage.

Notification No. 34/2004

exempts the taxable service provided by a goods transport agency to a customer , from the whole of service tax, in such cases where,-

i. the gross amount charged on consignments transported in a goods carriage does not exceed rupees on thousand five hundred’ or

ii. the gross amount charged on an individual consignment transported on a goods carriage does not exceed rupees seven hundred fifty.

E. Reverse Charge Mechanism:

Notification No. 35/2004

Person making payment towards freight would be liable to pay the service tax, in case the consignor or the consignee of the goods transported in one of the following,-

i. Factory registered under or governed by the Factories Act;

ii. Company established by or under the Companies Act;

iii. Corporation established by or under any law;

iv. Society registered under Societies Registration Act or similar law;

v. Co-operative society established by or under any law;

vi. Dealer of excisable goods, registered under the Central Excise Law; or

vii. Anybody corporate established, or a partnership firm registered, by or under any law.

In cases other than those mentioned in para above, the service tax is to be paid by the Goods transport Agency.

F. Exemption & Exclusion:

1. Exemption to Small Scale Service Providers:

The aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed rupees *ten lakhs in the preceding financial year.

2. Exemption under Mega Exemption NN 25/2012

Entry No. 21. Services provided by a goods transport agency by way of transportation of -(a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;

(b) goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or

(c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;

By CA Vijaykumar Gutte

Pune, Maharashtra