Regarding Service Tax on freight
This query is : Resolved
24 July 2009
I have some queries regarding service tax.
I am a proprietor of a Factory and i brought all my raw material from outside state by Indian Railway wagons & trasnportar's truck.
Now the query are as follows :
1) Raw material brought by Indian Railway wagons upto destination Railway station.
Mr. A works for the proprietor to load Pulses (Raw Material) in lorry from railway wagon. The proprietor pays the Lorry freight to Mr. A and MR A pays the freight to truck owner. No consignment note is made. Whether this service comes under service tax? if so under what head?
Mr.A is an individual. If lorry freight paid by Mr. A - what is the effect? Mr. A is authoried by the railway department for clearing work at railway good shed.
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance to pay.
The transhipment broker issues his bill (Truck Advance, Labour, Commision etc,) So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and no service tax is paid by consignor or transportar. I am liable to pay the service tax or not. What will be the rate of service tax. In case service tax is paid by the consignor then what will be the treatment.
Please let me know the solution of above mentioned queries.
Kindly reply at an earliest.
Thanks
Sunil
Cell :94350-51992
I am a proprietor of a Factory and i brought all my raw material from outside state by Indian Railway wagons & trasnportar's truck.
Now the query are as follows :
1) Raw material brought by Indian Railway wagons upto destination Railway station.
Mr. A works for the proprietor to load Pulses (Raw Material) in lorry from railway wagon. The proprietor pays the Lorry freight to Mr. A and MR A pays the freight to truck owner. No consignment note is made. Whether this service comes under service tax? if so under what head?
Mr.A is an individual. If lorry freight paid by Mr. A - what is the effect? Mr. A is authoried by the railway department for clearing work at railway good shed.
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance to pay.
The transhipment broker issues his bill (Truck Advance, Labour, Commision etc,) So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and no service tax is paid by consignor or transportar. I am liable to pay the service tax or not. What will be the rate of service tax. In case service tax is paid by the consignor then what will be the treatment.
Please let me know the solution of above mentioned queries.
Kindly reply at an earliest.
Thanks
Sunil
Cell :94350-51992
24 July 2009
The query revolves on who is provding the service whether the good transport owner/ operator or the AGENT.
If agent then GTA liability falls oon you since you are a factory under factories act.
If agent then GTA liability falls oon you since you are a factory under factories act.
25 July 2009
Sir,
For clarification I am sending the following.
1) Mr.A is an individual and he takes Trucks from the Truck Association and received freight on behalf of Truck owners.Mr. A is authoried by the railway department for clearing work at railway good shed. If lorry freight paid by Mr. A - what is the effect?
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance is paid by me.
The transhipment broker issues his bill (Truck Advance paid, Labour, Commision etc,)
So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery and freight is paid on the basis of challan.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and service tax is paid by consignor and charged in bilty. I am liable to pay the service tax or not. What will be the rate of service tax. As service tax is paid by the consignor on our behalf then I will liable for service tax.
Sir,
For clarification I am sending the following.
1) Mr.A is an individual and he takes Trucks from the Truck Association and received freight on behalf of Truck owners.Mr. A is authoried by the railway department for clearing work at railway good shed. If lorry freight paid by Mr. A - what is the effect?
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance is paid by me.
The transhipment broker issues his bill (Truck Advance paid, Labour, Commision etc,)
So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery and freight is paid on the basis of challan.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and service tax is paid by consignor and charged in bilty. I am liable to pay the service tax or not. What will be the rate of service tax. As service tax is paid by the consignor on our behalf then I will liable for service tax.
25 July 2009
Sir,
For clarification I am sending the following.
1) Mr.A is an individual and he takes Trucks from the Truck Association and received freight on behalf of Truck owners.Mr. A is authoried by the railway department for clearing work at railway good shed. If lorry freight paid by Mr. A - what is the effect?
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance is paid by me.
The transhipment broker issues his bill (Truck Advance paid, Labour, Commision etc,)
So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery and freight is paid on the basis of challan.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and service tax is paid by consignor and charged in bilty. I am liable to pay the service tax or not. What will be the rate of service tax. As service tax is paid by the consignor on our behalf then I will liable for service tax.
Sir,
For clarification I am sending the following.
1) Mr.A is an individual and he takes Trucks from the Truck Association and received freight on behalf of Truck owners.Mr. A is authoried by the railway department for clearing work at railway good shed. If lorry freight paid by Mr. A - what is the effect?
2) Sometimes proprietor brought Raw material (Pulses) in another station in the state by Indian Railway goods wagons and His staff loads the same in local trucks provided by the truck association the goods yard. Only challan is issued after loading. suppose freight @ Rs.60 per quintal then total freight = 200 qtls X 60 = Rs.12000/-
Out of which Rs.6000 is paid by my staff (taken from trashipment broker ) and the balance is paid by me.
The transhipment broker issues his bill (Truck Advance paid, Labour, Commision etc,)
So I will be liable to pay service tax or not.if I am liable then what will be rate of Service Tax.
Only challan is issued for the delivery and freight is paid on the basis of challan.
3) In road transporation the proprietor brought Raw Material from outside state.
In which bilty or COnsignment note issued and service tax is paid by consignor and charged in bilty. I am liable to pay the service tax or not. What will be the rate of service tax. As service tax is paid by the consignor on our behalf then I will liable for service tax.
25 July 2009
Sir
I am very much confused in Service Tax and I have few queries regarding the service Tax.
1) What is the minimium amount in which Road Freight of a truck is exempted. I am a proprietor of a factory registered under factory. My firm is proprietorship firm.
The trucks belongs to an individual who is not registered in Service Tax. There is a railway authorized agent who supplies Trucks to me for transhipment of goods from wagons to my factory godown. I pays the freight to the agent and The agent distributes the freight to the trucks owner.
In the above mentioned situation please know me the rules of service tax in freight.
Secondly I am loading the goods in the truck from wagons in the Individual truck owners who is not registered. I issues a self challan and the freight is around Rs.1600/- . No Consignment note is made.
I am liable to pay service tax or not.
If yes what will be the rate of Service Tax.
I am very much confused in Service Tax and I have few queries regarding the service Tax.
1) What is the minimium amount in which Road Freight of a truck is exempted. I am a proprietor of a factory registered under factory. My firm is proprietorship firm.
The trucks belongs to an individual who is not registered in Service Tax. There is a railway authorized agent who supplies Trucks to me for transhipment of goods from wagons to my factory godown. I pays the freight to the agent and The agent distributes the freight to the trucks owner.
In the above mentioned situation please know me the rules of service tax in freight.
Secondly I am loading the goods in the truck from wagons in the Individual truck owners who is not registered. I issues a self challan and the freight is around Rs.1600/- . No Consignment note is made.
I am liable to pay service tax or not.
If yes what will be the rate of Service Tax.
20 July 2025
Sure! Here's a detailed explanation on Service Tax applicability on freight and related queries based on your scenario:
1. Raw material brought by Indian Railway wagons, freight paid to Mr. A (an individual agent):
Mr. A acts as an agent authorized by the railway department who arranges trucks for transporting goods.
Who is providing the service?
The actual service provider is the truck owner/operator who transports goods. Mr. A is an intermediary or agent.
Service Tax liability:
According to the Service Tax law (pre-GST era), the Goods Transport Agency (GTA) service is taxable if the provider is registered under Service Tax and the gross freight charged exceeds the exemption limit (which was Rs. 1.5 lakh per month per provider at that time).
Since Mr. A is not registered, and if the truck owners are also not registered, no Service Tax liability arises on freight, as the service provider must be registered and charge Service Tax to the recipient.
If Mr. A collects freight on behalf of truck owners, the liability to pay Service Tax lies on the truck owners if applicable, not on you (the proprietor), provided you are merely the recipient of the service.
2. Loading raw material in local trucks with only a challan issued (freight paid partly by your staff and partly by you via a transshipment broker):
The transshipment broker is billing you for services (truck advance, labour, commission, etc.).
Is Service Tax applicable to you?
If the transshipment broker is registered under Service Tax and provides you the service, you need to pay Service Tax on the amount charged by the broker.
For freight, if paid to truck owners or brokers who are registered, they should charge Service Tax.
If you are paying directly to an unregistered truck owner or broker below threshold, no Service Tax is payable.
Rate of Service Tax:
Pre-GST, GTA services were taxed at around 12% (with Cess) — effective rate varied over years. The broker should charge accordingly if registered.
3. Road transportation of raw material from outside state, where consignor pays service tax and charges in the bilty:
If the consignor (seller/supplier) has paid Service Tax on freight, and this amount is included in the freight charged to you:
Are you liable to pay Service Tax?
No, because the Service Tax has already been paid by the consignor.
You are paying the freight including Service Tax; no double taxation.
If service tax is paid by consignor and charged in the freight bill (bilty), you are not required to pay separately.
4. Minimum exemption limit for freight services:
There was a threshold exemption for Service Tax on GTA services, usually Rs. 1.5 lakh per month turnover per provider.
If the truck owner/agent’s gross freight receipts exceed that limit, they are required to register and charge Service Tax.
If below the limit, no Service Tax is payable.
Summary:
Situation Who Pays Service Tax? Rate / Notes
Freight paid to Mr. A (agent) who passes to truck owners Truck owners (if registered) Approx 12% pre-GST (GTA service tax)
Transshipment broker bills you You pay Service Tax on broker’s bill (if broker registered) Broker charges Service Tax
Consignor pays service tax included in freight No extra tax payable by you No double tax
Freight paid to unregistered truck owners below threshold No Service Tax applicable Exempt under threshold limit
1. Raw material brought by Indian Railway wagons, freight paid to Mr. A (an individual agent):
Mr. A acts as an agent authorized by the railway department who arranges trucks for transporting goods.
Who is providing the service?
The actual service provider is the truck owner/operator who transports goods. Mr. A is an intermediary or agent.
Service Tax liability:
According to the Service Tax law (pre-GST era), the Goods Transport Agency (GTA) service is taxable if the provider is registered under Service Tax and the gross freight charged exceeds the exemption limit (which was Rs. 1.5 lakh per month per provider at that time).
Since Mr. A is not registered, and if the truck owners are also not registered, no Service Tax liability arises on freight, as the service provider must be registered and charge Service Tax to the recipient.
If Mr. A collects freight on behalf of truck owners, the liability to pay Service Tax lies on the truck owners if applicable, not on you (the proprietor), provided you are merely the recipient of the service.
2. Loading raw material in local trucks with only a challan issued (freight paid partly by your staff and partly by you via a transshipment broker):
The transshipment broker is billing you for services (truck advance, labour, commission, etc.).
Is Service Tax applicable to you?
If the transshipment broker is registered under Service Tax and provides you the service, you need to pay Service Tax on the amount charged by the broker.
For freight, if paid to truck owners or brokers who are registered, they should charge Service Tax.
If you are paying directly to an unregistered truck owner or broker below threshold, no Service Tax is payable.
Rate of Service Tax:
Pre-GST, GTA services were taxed at around 12% (with Cess) — effective rate varied over years. The broker should charge accordingly if registered.
3. Road transportation of raw material from outside state, where consignor pays service tax and charges in the bilty:
If the consignor (seller/supplier) has paid Service Tax on freight, and this amount is included in the freight charged to you:
Are you liable to pay Service Tax?
No, because the Service Tax has already been paid by the consignor.
You are paying the freight including Service Tax; no double taxation.
If service tax is paid by consignor and charged in the freight bill (bilty), you are not required to pay separately.
4. Minimum exemption limit for freight services:
There was a threshold exemption for Service Tax on GTA services, usually Rs. 1.5 lakh per month turnover per provider.
If the truck owner/agent’s gross freight receipts exceed that limit, they are required to register and charge Service Tax.
If below the limit, no Service Tax is payable.
Summary:
Situation Who Pays Service Tax? Rate / Notes
Freight paid to Mr. A (agent) who passes to truck owners Truck owners (if registered) Approx 12% pre-GST (GTA service tax)
Transshipment broker bills you You pay Service Tax on broker’s bill (if broker registered) Broker charges Service Tax
Consignor pays service tax included in freight No extra tax payable by you No double tax
Freight paid to unregistered truck owners below threshold No Service Tax applicable Exempt under threshold limit
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