Service tax on freight piad

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 November 2014 We are a partnership firm engaged in retail trading of machinery and parts. We have to pay freight to various transporters against inter- state purchases (Fright approx. 5.00 lac during the year). Whether we are liable to pay service tax on freight paid ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 November 2014 Normally, the liability to pay service tax is on the person providing the service. But, by fiction of law, section 68(2) of the Act has empowered the Central Government to notify such services, on which the liability to pay service tax, to the extent specified, shall be shifted from the service provider to the service recipient. This is popularly known as Reverse Charge Mechanism (RCM). Notification No. 30/2012-ST dated 20-06-2012 has been issued which covers GTA service and shifts full (100%) liability of service tax on the service receiver. Any person located in taxable territory, who pays or is liable to pay freight is treated as service receiver.
Partnership firm is covered in the above notification.

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