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service tax on gross freight or net freight

This query is : Resolved 
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(Querist)
15 June 2009 sir,

Please clarify the applicability of service tax in the following situation?

1.Mr. A has purchased rice 100qtls @2500/- amounting to Rs.250000 on ex-factory basis from B.The rice is sent to A through Transport agency for freight of Rs.32000/-. At unloading weight is 98qtls. Now there is shortage of 2qtls amounting to Rs.5000/-.So, A has deducted this amount of Rs.5000/- from the freight payable to GTA, and paid Rs.27000/- to GTA.

Please clarify whether service tax is applicable:
a) on 32000/-.or
b) On 27000/-

Please explain it because it is happening in every industry.
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Ram Avtar Singh

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Ram Avtar Singh (Expert)
15 June 2009 Service tax on Payment basis you have paid 27000 service tax to be paid on 27000/= and tds to be deduct on 27000/=only
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