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vishal gupta (CA) (54 Points)

13 August 2013

I have a confusion with a provision with respect to Goods Transport Agency.

To brief Service Receiver is liable to pay service tax on services received.

A pvt ltd company engaged in manufacturing business receives services of GTA , (Raw Material bought).

Rate is pre decided with the transport company and thus the bill is charged with that rate.

For Eg:- Rate decided Rs.250/Metric Tonne, And Quantity being 10Mt , therefore the bill amount comes to 10*250=2500.

No service tax amount is mentioned seperately.

Please tell me what should be the liability of the pvt ltd company in the above situation.

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7 Replies

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 13 August 2013

Asumed that company is liable to pay ST under RCM.......so co liable to pay ST on Rs. 2500 less 75% available Abatement).......co is required to pay the tax from its pocket but it can take the credit of such ST under Rule 9(1)(e) treating the same as input service.

vishal gupta (CA) (54 Points)
Replied 13 August 2013

Thanks saurabh for the reply.

As u said that the co. need to pay ST on 2500*3.09% after abatement.

but cant the same cannot be paid using back calculation treating the sum of Rs 2500 as inclusive of service tax

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 13 August 2013

No , perhaps not....because the Rs. 2500 was not inclusive of Tax because Service receiver cannot assume that he has paid invoice Amt inclusive of ST....because if the same coul\d be assumed then it means that Service provider has recovered St...which is not permitted ...

Aanchal Bhatiyani (CA Job) (26 Points)
Replied 13 August 2013

Since, Service tax is not mentioned on the invoice.

so assuming that the provider is not in the taxable territory and is not liable to charge service tax.

But as per RCM, the receiver has liability to pay st.

Considering this as inclusive of taxes.

The receiver is liable to pay 100 % tax.=

2500/112.36*12.36=275

CA Vikash Burnwal (CA,CS,CWA) (45 Points)
Replied 14 August 2013

As per clause (2) of notification 30/2012-ST, dated 20-06-2012 service tax is payable by recipient of service in respect of services provided by goods transport agency for transportation of goods by road where the consignee or consigner is of the specified class (i.e. factory registered under Factory Act, society registered under Societies Registration Act, Co-operative society, dealer of excisable goods registered under Central Excise Act, a body corporate established under any law, a partnership firm).

Para 2 of this notification provides that service tax is payable by the person who pays or is liable to pay freight by himself or through agent for transportation of goods by road in goods carriage located in taxable territory shall be treated as person who receives service for the purpose of this notification.

Abatement: As per entry no.7 of notification 26/2012-ST, dated 20-06-2012 the service tax is payable on 25% of gross amount charged. The abatement of 75% is permitted. Issue of consignment note is mandatory.

Conclusion: Reverse Charge is applicable at 3.09% (12.36%X25%).

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