LIABILITY OF DISCHARGING SERVICE TAX

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This query is : Resolved

P.S.VISHWANATHAN

P.S.VISHWANATHAN (Querist)
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14 November 2008 THE ONUS ON DISCHARGING THE SERVICE TAX LIABILITY RESTS ON THE PERSON MAKING THE PAYMENT OF FREIGHT.

WE RECEIVE FREIGHT BILLS FROM THE TRANSPORTERS .WHO ARE REGISTERED AS A SERVICE TAX PROVIDER, WHICH SHOWS A SERVICE TAX COMPONENT (3.09%) . THEY ALSO UNDERTAKE TO PAY THE SERVICE TAX THUS COLLECTED DIRECTLY TO THE SERVICE TAX DEPARTMENT. IN THIS RESPECT WHAT WE SHOULD DO? ARE WE STILL LIABLE TO PAY THE SERVICE TAX TO THE DEPARTMENT? THE TRANSPORTERS WHO ARE REGISTERED UNDER THE SERVICE TAX ARE VERY EMPHATIC THAT THEY CANNOT LET US DEDUCT THE SERVICE TAX COMPONENT AND PAY THE SAME SINCE THEY WILL HAVE ACCOUNTING PROBLEM.

PLEASE SUGGEST A REMEDY. WE AWAIL INPUT TAX CREDIT AND THEREFORE PLEASE ADVISE WHAT IS THE RATE OF SERVICE TAX TO BE PAID IN THE CIRCUMSTANCES AS EXPLAINED ABOVE? IS IT 3.09% OR 12.36% ?

Ajith Kumar

Ajith Kumar (Expert)
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14 November 2008 As per notification No.36/2004ST the person making the payment is laible for payment of service tax, if the consignee or consignor is persons specified therin.
Hence, if the consigner or consignee is persons specified in that notification, transporater canot collect and pay the service tax, it will not discharge the liability of the payer.