Service tax applicable or not

This query is : Resolved

Sundar (Querist)
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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?.

Abbas

Abbas (Expert)
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26 March 2012 Yes, Mr. A is covered and he can take CENVAT

Sundar

Sundar (Querist)
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27 March 2012 Thanks sir,but clarify Mr.A, how to take CENVAT from the receiving or paying charges?

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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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

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