Service tax on road transport
This query is : Resolved
16 November 2013
We are exporters.
"X" is our forwarder. He hires "Y" to transport container by road from our factory to the port.
"Y" issues GC note in our name.
"X" gives us comprehensive bill for all his services. One of the billing item is "transportation from factory to port"
"X" charges us 12.36% ST on this transportation.
His claim is that he is not GTA but a forwarder, hence there is no abatement.
Please guide me.
"X" is our forwarder. He hires "Y" to transport container by road from our factory to the port.
"Y" issues GC note in our name.
"X" gives us comprehensive bill for all his services. One of the billing item is "transportation from factory to port"
"X" charges us 12.36% ST on this transportation.
His claim is that he is not GTA but a forwarder, hence there is no abatement.
Please guide me.
19 November 2013
To qualify as GTA three conditions need to exist:
(1) The goods are transported by road
(2) The value of each consignment is more than Rs.1,500/-
(3) A proper consignment note is issued.
If the service received is GTA then the service recipient is liable to pay service tax on the abated 25% of GTA value.
In your case it is obvious that Y is the transporter providing GTA Service. He has issued a proper Consignment Note in your company's name. You are the consignee. Therefore you are liable for RCM on the GTA service received.
In case of transportation X has absolutely no role. All he has done is act as a facilitator and the transport charges claimed by him are reimbursement of expenses incurred by him on your behalf. No service tax is leviable on reimbursement of expenses (actual bill amount).
Therefore the claim of X is not sustainable. From his bill for services, the transportation charges should be reduced and the ST payable @ 12.36% computed. to this total amount the actual transportation charges paid to Y should be added and paid to him. Even if you accept the contention of X and pay full ST on transportation to him, it does absolve your company from the RCM liability on GTA.
Please ensure that you claim the correct Input Service Credit in your refund claim as advised above.
(1) The goods are transported by road
(2) The value of each consignment is more than Rs.1,500/-
(3) A proper consignment note is issued.
If the service received is GTA then the service recipient is liable to pay service tax on the abated 25% of GTA value.
In your case it is obvious that Y is the transporter providing GTA Service. He has issued a proper Consignment Note in your company's name. You are the consignee. Therefore you are liable for RCM on the GTA service received.
In case of transportation X has absolutely no role. All he has done is act as a facilitator and the transport charges claimed by him are reimbursement of expenses incurred by him on your behalf. No service tax is leviable on reimbursement of expenses (actual bill amount).
Therefore the claim of X is not sustainable. From his bill for services, the transportation charges should be reduced and the ST payable @ 12.36% computed. to this total amount the actual transportation charges paid to Y should be added and paid to him. Even if you accept the contention of X and pay full ST on transportation to him, it does absolve your company from the RCM liability on GTA.
Please ensure that you claim the correct Input Service Credit in your refund claim as advised above.
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