Taxablity of transportation service
This query is : Resolved
11 May 2013
Firm'A' is in transpot business & Firm 'B' does mining & Crushing of Iron ores. Firm 'A' transports the iron ores of Firm'B' from it's mines to it's crusher plants. Is service tax applicable to firm 'A' (the transporter) in such type of transport service ?? Please reply in details.
Thanks & Regards
Thanks & Regards
12 May 2013
Dear Tiwary,
To become GTA service, the GTA service provider should issue Consignment note as given under Rule 4B of Service Tax Rules 1994. It should contain the following
1) Name of the Consignor
2) Name of the consignee
3) details of the place of origin & destination with the goods being transported
4) Mention service tax category as “Goods Transport Agency” along with Service Tax Registration No
5) Registration No. (truck/trailer no as allotted by RTO) of the goods carriage in which goods are transported
6) Person liable for paying service tax is Consignee
You service can also fall under Supply of Tangible goods, if you are not issuing consignment note & not amount to transfer of right to use .
If you are providing Transportation activity exclusively to one it can also fall under the “Transfer of right to use as per article 366(29-A)” (subject to condition, Please refer case of State of Andhra Pradesh v/s GS Lamba) which will invite State VAT.
Please assess your case & decide.
Arvind Tiwari
09322368699
To become GTA service, the GTA service provider should issue Consignment note as given under Rule 4B of Service Tax Rules 1994. It should contain the following
1) Name of the Consignor
2) Name of the consignee
3) details of the place of origin & destination with the goods being transported
4) Mention service tax category as “Goods Transport Agency” along with Service Tax Registration No
5) Registration No. (truck/trailer no as allotted by RTO) of the goods carriage in which goods are transported
6) Person liable for paying service tax is Consignee
You service can also fall under Supply of Tangible goods, if you are not issuing consignment note & not amount to transfer of right to use .
If you are providing Transportation activity exclusively to one it can also fall under the “Transfer of right to use as per article 366(29-A)” (subject to condition, Please refer case of State of Andhra Pradesh v/s GS Lamba) which will invite State VAT.
Please assess your case & decide.
Arvind Tiwari
09322368699
Message likes :
1 times
14 May 2013
But in my case there is only one entity whose goods are being transported. Can the same be construed as consignor at it's mines & consignee at it's crusher and service tax be levied ?? As far as rule 4B is concerned, it talks about 'a consignment note by whatever name may be called' so can we stand to non levy of Service tax by saying that no such note is prepared or the invoice raised by the transporter would be construed as consignment note.. Actually I am looking for a reasonable ground for levy or non levy of tax, as the case may be. Please clear my doubt.
26 July 2025
Great detailed query! Here’s a clear explanation regarding the **service tax applicability on transportation by Firm 'A' to Firm 'B' when transporting goods for the same entity**:
---
### 1. **Goods Transport Agency (GTA) Service and Service Tax**
* Service Tax is applicable on transportation of goods by a **Goods Transport Agency (GTA)** under **“Transport of Goods by Road” service**.
* The GTA service provider issues a **consignment note** as per **Rule 4B of the Service Tax Rules, 1994** which must include:
* Names of consignor and consignee,
* Details of goods,
* Vehicle registration,
* Service Tax Registration Number,
* Mention that service tax is charged on GTA service.
* **The Consignee is liable to pay Service Tax**, not the transporter (service provider).
---
### 2. **Single Entity Consignor and Consignee Case**
* In your case, the same entity (Firm B) owns both the mine (consignor) and crusher (consignee).
* Question: **Is transportation between two units of the same entity taxable?**
---
### 3. **Legal Position & Practice**
* **According to Rule 4B**, the consignment note must be issued even if the consignor and consignee are the same legal entity but different units.
* The service tax department usually insists that transportation by GTA **is taxable even if goods are transported within the same group or entity**, provided consignment note is issued.
* However, **if no consignment note is issued**, the service may not be covered as GTA service but could be treated as transfer of goods (which could attract VAT, not service tax).
* The invoice alone **cannot substitute a consignment note** as per the rule.
---
### 4. **Points to Consider**
* If Firm 'A' issues a **valid consignment note** to Firm 'B' (even if same entity), **service tax is leviable** and payable by the consignee (Firm 'B').
* If no consignment note is issued and no GTA registration exists, the transaction may be considered as **sale of goods or transfer of right to use**, attracting State VAT instead.
* Some argue that intra-company movement of goods is not a taxable service since the activity is not rendered to a "third party," but **law and practice favor levy of service tax on GTA service if consignment note issued**.
---
### 5. **Summary**
| Scenario | Service Tax Applicability |
| --------------------------------- | ------------------------------------------------ |
| Consignment note issued | Taxable as GTA service; tax payable by consignee |
| No consignment note issued | Likely NOT GTA service; VAT may apply instead |
| Same entity consignor & consignee | Still taxable if consignment note issued |
| Invoice used as consignment note | Not valid; does not comply with Rule 4B |
---
### 6. **Reasonable Grounds for Levy / Non-Levy**
* **Levy**: Issue consignment note as per Rule 4B, get Service Tax Registration, pay service tax.
* **Non-Levy**: No consignment note issued, service treated as goods movement within company, no taxable GTA service.
---
### Recommendation:
* Consult the local Service Tax authority or a tax consultant for specific facts.
* If you want to avoid service tax, avoid issuing consignment notes, but be aware of VAT implications.
* If service tax is levied, ensure proper compliance with consignment note and payment.
---
---
### 1. **Goods Transport Agency (GTA) Service and Service Tax**
* Service Tax is applicable on transportation of goods by a **Goods Transport Agency (GTA)** under **“Transport of Goods by Road” service**.
* The GTA service provider issues a **consignment note** as per **Rule 4B of the Service Tax Rules, 1994** which must include:
* Names of consignor and consignee,
* Details of goods,
* Vehicle registration,
* Service Tax Registration Number,
* Mention that service tax is charged on GTA service.
* **The Consignee is liable to pay Service Tax**, not the transporter (service provider).
---
### 2. **Single Entity Consignor and Consignee Case**
* In your case, the same entity (Firm B) owns both the mine (consignor) and crusher (consignee).
* Question: **Is transportation between two units of the same entity taxable?**
---
### 3. **Legal Position & Practice**
* **According to Rule 4B**, the consignment note must be issued even if the consignor and consignee are the same legal entity but different units.
* The service tax department usually insists that transportation by GTA **is taxable even if goods are transported within the same group or entity**, provided consignment note is issued.
* However, **if no consignment note is issued**, the service may not be covered as GTA service but could be treated as transfer of goods (which could attract VAT, not service tax).
* The invoice alone **cannot substitute a consignment note** as per the rule.
---
### 4. **Points to Consider**
* If Firm 'A' issues a **valid consignment note** to Firm 'B' (even if same entity), **service tax is leviable** and payable by the consignee (Firm 'B').
* If no consignment note is issued and no GTA registration exists, the transaction may be considered as **sale of goods or transfer of right to use**, attracting State VAT instead.
* Some argue that intra-company movement of goods is not a taxable service since the activity is not rendered to a "third party," but **law and practice favor levy of service tax on GTA service if consignment note issued**.
---
### 5. **Summary**
| Scenario | Service Tax Applicability |
| --------------------------------- | ------------------------------------------------ |
| Consignment note issued | Taxable as GTA service; tax payable by consignee |
| No consignment note issued | Likely NOT GTA service; VAT may apply instead |
| Same entity consignor & consignee | Still taxable if consignment note issued |
| Invoice used as consignment note | Not valid; does not comply with Rule 4B |
---
### 6. **Reasonable Grounds for Levy / Non-Levy**
* **Levy**: Issue consignment note as per Rule 4B, get Service Tax Registration, pay service tax.
* **Non-Levy**: No consignment note issued, service treated as goods movement within company, no taxable GTA service.
---
### Recommendation:
* Consult the local Service Tax authority or a tax consultant for specific facts.
* If you want to avoid service tax, avoid issuing consignment notes, but be aware of VAT implications.
* If service tax is levied, ensure proper compliance with consignment note and payment.
---
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability of TDS on CFS, CHA fees, and shipping line charges
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- Regarding TDS not deducted on rent
- Section 194I not showing in TDS RPU for Compnay Assessee for TDS on rent
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- PRODUCT AND SERVICE CATEGORY CODE
- Tax audit & Switching from Presumptive taxation
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
