Service tax in freight collected by Transporter

This query is : Resolved

Ahsan Mansoori (Querist)
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18 December 2007 Sir,

Can a Transporter being GTA collect service tax from the consignor(who pays freight) in a proper channel and issue a letter of declaration to the consignor that he is collecting the service tax along with the freight and pay it to the government on its behalf.

Further in scrutiny of consignor can a declaration form a relevant evidence/ proof of service tax payment on the freight paid during an assessment year.

Is the above procedure specified in the law please provide me with the details.

Regards
Ahsan K.Mansoori

Dayal

Dayal (Expert)
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19 December 2007
If you are an Individual or a proprietary firm, then yes the transporter can charge / collect and pay to the government, if not then The Transporter is neither the consignor or Consignee as such he cannot charge/ collect and pay on your behalf

The onus of discharging the service tax is cast on receiver by virtue of a notification issued under the act and it does not allow transfer of liability, even though paid appropriately , thus if you fall under any of the categories clarified below service tax becomes payable by you.

The act states that service tax is to be paid by the following person paying the freight (Notification No. 35/2004-ST )

i) a factory registered under the Factory Act, 1948;
ii) any company established under the Companies Act, 1956;
iii) any corporation established under any law;
iv) any society registered under the Societies Registration Act, 1860 or under any law corresponding to that Act in force in any part of India;
v) any co-operative society established under any law;
vi) any dealer of excisable goods, who is registered under the Central Excise Act, 1944
vii) any body corporate established, or a registered partnership firm.

Thus if you fall under any of the above categories you have to discharge the service tax liability, failure to discharge will only require you to pay the same with interest at the time of audit

The declaration as mentioned by you will not help / assist in any form in terms of the provisions of the act

The provisions of the Act has been clarified as above, hope this clarifies your query under question.

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Dayal

Dayal (Expert)
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19 December 2007 replied

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