Service tax reverse charges on gta

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This query is : Resolved

Ashok (Querist)

23 December 2013 Dear sir,

We have a proprietorship firm. we are a taking the service from goods transport agency and the transporter is not charged the service tax in their billing. thereby a question is that:
Q. we are liable to pay the service tax in case of proprietorship firm or only liable in case of corporate. (partnership, ltd & pvt ltd)

pls explain along with detail of services, where we liable for service tax payment against reverse charges.

Ganeshbabu K

Ganeshbabu K (Expert)

23 December 2013 1)Tax when consignment note issued. Simple transport of goods service (without issue of consignment note) is not a GTA service.

2)Person liable to freight is liable to pay service tax on GTA if he is body corporate, factory, registered dealer under Central excise, society, cooperative society, partnership firm (registered or not).

3)Tax on 25% if GTA does not avail Cenvat Credit – Hence service receiver should get certificate from him that he has not availed Cenvat credit.

4)GTA is liable to pay service tax if (a) person liable to pay freight is individual or HUF (b) Person liable to ay freight is outside taxable territory (like J&K, Nepal, Bhutan, Bangla Desh, Pakistan etc.).

Ashok

Ashok (Querist)

24 December 2013 Pls clarify point no. 3:-

tax on 25% would be charged by the transporter and service receiver can avail cenvat credit, whether he charged in his bill. so why service receiver should get certificate from transporter that he has not availed cenvat credit.

and the main issue that if the transporter is not charged the service tax in his bill. so that we are liable to pay the tax. because we are register in a proprietorship firm?

Ashok

Ashok (Querist)

Ganeshbabu K

Ganeshbabu K (Expert)

24 December 2013 Actually abatement is available if cenvat credit on inputs,capital goods, and input services used for providing taxable services has not been taken under cenvat credit rools 2004
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so effective tax rate is 25% on 12.36 which is 3.09% on total frieght only if gta not availed cenvat credit on his inputs
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So it is mandatory to obtain a certificate from GTA to the effect that he has not availed cenvat credits for providing taxable service ,if this certificate is not available ,,benifit of abatement cannot be taken and DEMAND may arise for balance 75%
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however that is why it is advisable to GTA to preprint this declaration its invoice..it is also allowed

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