Service tax on gta.
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 July 2013
In case of Transportation of Goods by road service tax is payable by service receiver if service receiver is private limited company but can service receiver can transfer liability of payment of service tax to Goods Transport Agency ??
04 July 2013
as per law normally transferability of tax is not allowed, but as per as a recent judgement INDIRECT tax liability can be trfd. only if there is a contract existing relating to liability payment by any particular party.
Message likes :
1 times
05 July 2013
Hi
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
05 July 2013
Hi
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
05 July 2013
Hi
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
Yes I agree with Vikas. If the law provides that service receiver is liable under reverse charge mechanism.
Then the service tax liability has to be born and paid by receiver. The liability cannot be shifted by mutual agreement
However if the service receiver is an individual or HUF. The liability is on the provider.
Message likes :
1 times
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 July 2013
Hence in case of GTA service receiver is company than service tax payable by the company, but if goods transport agency decides & Company enters into agreement that service tax liability will be born by the Goods Transport agency than company will have not to pay service tax as per recent judgement of supreme court judgement. Am I Right ?
24 July 2025
Great question! Here’s a clear explanation on **Service Tax on Goods Transport Agency (GTA) under Reverse Charge and liability transfer**:
---
### 1. **Basic Rule under Service Tax on GTA**
* Under the Service Tax law, transportation of goods by road is taxable.
* **Reverse Charge Mechanism (RCM)** applies when the service receiver is a **body corporate (company, LLP, etc.)**, meaning the **company (service receiver) is liable to pay service tax instead of the GTA** (service provider).
* If the service receiver is an **individual or HUF**, then the liability lies on the GTA (service provider) to pay service tax.
---
### 2. **Can the Service Receiver Transfer the Tax Liability to the GTA by Agreement?**
* **Legally, the liability to pay service tax under RCM cannot be transferred by a contract or agreement**.
* **Section 68(2) of the Finance Act** and related rules say the liability under RCM is on the service receiver.
* Even if the parties agree contractually that the GTA will bear the service tax cost, **the law still holds the service receiver responsible for payment and compliance**.
---
### 3. **What about Supreme Court Judgement?**
* There is **no authoritative Supreme Court judgement that overrides the statutory position on RCM liability**.
* Some judgments have discussed tax incidence versus economic burden — **while economic burden can be shifted by agreement, legal liability under RCM remains on the service receiver**.
* So, if a company contracts with GTA stating GTA will bear tax cost, **that is a commercial arrangement but doesn’t absolve the company from tax compliance or payment**.
* Non-compliance by service receiver may invite penalties and interest from tax authorities.
---
### 4. **Summary**
| Situation | Tax Liability | Can Liability Be Transferred? |
| ---------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------ |
| Service receiver is a company (body corporate) | Service receiver (company) under RCM | No, legal liability remains on receiver despite any contract |
| Service receiver is individual/HUF | GTA (service provider) | N/A |
| Agreement to shift liability | Commercially possible but not legally valid | No, legal liability remains with service receiver |
---
### 5. **Practical Implications**
* Companies must pay service tax on GTA services received under RCM.
* If they want GTA to bear the cost, they can agree commercially, but **must ensure they comply with payment and reporting to avoid penalties**.
* GTA must issue proper invoices showing service tax amount even if contractually they bear the cost.
---
**If you want, I can share relevant statutory sections or notifications related to this topic. Would that help?**
---
### 1. **Basic Rule under Service Tax on GTA**
* Under the Service Tax law, transportation of goods by road is taxable.
* **Reverse Charge Mechanism (RCM)** applies when the service receiver is a **body corporate (company, LLP, etc.)**, meaning the **company (service receiver) is liable to pay service tax instead of the GTA** (service provider).
* If the service receiver is an **individual or HUF**, then the liability lies on the GTA (service provider) to pay service tax.
---
### 2. **Can the Service Receiver Transfer the Tax Liability to the GTA by Agreement?**
* **Legally, the liability to pay service tax under RCM cannot be transferred by a contract or agreement**.
* **Section 68(2) of the Finance Act** and related rules say the liability under RCM is on the service receiver.
* Even if the parties agree contractually that the GTA will bear the service tax cost, **the law still holds the service receiver responsible for payment and compliance**.
---
### 3. **What about Supreme Court Judgement?**
* There is **no authoritative Supreme Court judgement that overrides the statutory position on RCM liability**.
* Some judgments have discussed tax incidence versus economic burden — **while economic burden can be shifted by agreement, legal liability under RCM remains on the service receiver**.
* So, if a company contracts with GTA stating GTA will bear tax cost, **that is a commercial arrangement but doesn’t absolve the company from tax compliance or payment**.
* Non-compliance by service receiver may invite penalties and interest from tax authorities.
---
### 4. **Summary**
| Situation | Tax Liability | Can Liability Be Transferred? |
| ---------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------ |
| Service receiver is a company (body corporate) | Service receiver (company) under RCM | No, legal liability remains on receiver despite any contract |
| Service receiver is individual/HUF | GTA (service provider) | N/A |
| Agreement to shift liability | Commercially possible but not legally valid | No, legal liability remains with service receiver |
---
### 5. **Practical Implications**
* Companies must pay service tax on GTA services received under RCM.
* If they want GTA to bear the cost, they can agree commercially, but **must ensure they comply with payment and reporting to avoid penalties**.
* GTA must issue proper invoices showing service tax amount even if contractually they bear the cost.
---
**If you want, I can share relevant statutory sections or notifications related to this topic. Would that help?**
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