Service tax applicable or not
This query is : Resolved
26 March 2012
Mr.A is a Agent and B is a company and C is a Lorry Owner,Now,A is goods transport service provided to B through the C.
Mr.A some receive charges from B and pay charges to C.In this situation,Mr.A is cover under Service tax or not?.
Mr.A some receive charges from B and pay charges to C.In this situation,Mr.A is cover under Service tax or not?.
27 March 2012
Thanks sir,but clarify Mr.A, how to take CENVAT from the receiving or paying charges?
24 July 2025
Here’s the explanation for your query about Mr. A, the agent, and service tax/CENVAT applicability:
Scenario recap:
Mr. A acts as an agent between B (company) and C (lorry owner).
Mr. A receives charges from B for transport services and then pays C for actual transportation.
Question: Is Mr. A liable to pay service tax? And how does he claim CENVAT credit?
Service tax applicability on Mr. A (Agent):
Yes, Mr. A is covered under service tax as a Goods Transport Agency (GTA) if he issues consignment notes or similar documents.
The service tax liability is on the GTA service provided to B.
Mr. A collects service tax from B on his service charges.
Mr. A is responsible to pay service tax on the gross amount charged to B, i.e., what he charges B (including his commission or margin).
CENVAT credit for Mr. A:
Since Mr. A pays transportation charges to C, who is the actual transporter, he can avail CENVAT credit on the service tax paid to C (if C is registered and charges service tax).
The CENVAT credit on input services (from C) can be adjusted against the service tax liability on GTA service provided to B.
So effectively, Mr. A pays service tax on his gross charge to B but reduces the liability by crediting the tax paid to C.
How to take CENVAT credit practically:
Mr. A must ensure that:
C has issued a proper service tax invoice showing service tax charged.
Mr. A maintains records and invoices as per CENVAT Credit Rules.
Mr. A will file service tax returns declaring output service tax (on GTA service to B) and input service tax credit (service tax paid to C).
The net tax payable = Output service tax (on gross amount charged to B) – Input service tax credit (paid to C).
Summary:
Role Taxability CENVAT Credit
Mr. A (Agent) Yes, liable on gross amount Can take credit of service tax paid to C
C (Transporter) Yes, liable on transportation Charges service tax to Mr. A
B (Company) Service recipient Pays service tax included in charges by Mr. A
Scenario recap:
Mr. A acts as an agent between B (company) and C (lorry owner).
Mr. A receives charges from B for transport services and then pays C for actual transportation.
Question: Is Mr. A liable to pay service tax? And how does he claim CENVAT credit?
Service tax applicability on Mr. A (Agent):
Yes, Mr. A is covered under service tax as a Goods Transport Agency (GTA) if he issues consignment notes or similar documents.
The service tax liability is on the GTA service provided to B.
Mr. A collects service tax from B on his service charges.
Mr. A is responsible to pay service tax on the gross amount charged to B, i.e., what he charges B (including his commission or margin).
CENVAT credit for Mr. A:
Since Mr. A pays transportation charges to C, who is the actual transporter, he can avail CENVAT credit on the service tax paid to C (if C is registered and charges service tax).
The CENVAT credit on input services (from C) can be adjusted against the service tax liability on GTA service provided to B.
So effectively, Mr. A pays service tax on his gross charge to B but reduces the liability by crediting the tax paid to C.
How to take CENVAT credit practically:
Mr. A must ensure that:
C has issued a proper service tax invoice showing service tax charged.
Mr. A maintains records and invoices as per CENVAT Credit Rules.
Mr. A will file service tax returns declaring output service tax (on GTA service to B) and input service tax credit (service tax paid to C).
The net tax payable = Output service tax (on gross amount charged to B) – Input service tax credit (paid to C).
Summary:
Role Taxability CENVAT Credit
Mr. A (Agent) Yes, liable on gross amount Can take credit of service tax paid to C
C (Transporter) Yes, liable on transportation Charges service tax to Mr. A
B (Company) Service recipient Pays service tax included in charges by Mr. A
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