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Service tax liability on transportation

Dipak Ghosh (GM Finanace and Accounts) (30 Points)

26 September 2016

Dear Sir,

I have one query regarding Service Tax. Our Company is a Freight Forwarder we have provided some transport service to the foreign Agent who's consignee located in India.

We have taken Transport Service From A Rs. 10 lacs and as per A's invoice service tax to be paid by service receiver. We have billed to the Agent C (outside India) as transportation charges Rs.12 lacs + service Tax @ 4.5%= 12,54,000/- . We have paid this Rs.54,000/- to the service tax department.

Is it required to pay service tax under GTA on Rs.10 lacs also please advice.

Warm Regards

Dipak Ghosh

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5 Replies

Deepak (Chartered Accountant) (254 Points)
Replied 26 September 2016

Yes. You need to pay under reverse charge mechanism as per notification no.30/2012. However, you can also claim the CENVAT credit of the amount paid under RCM based on Challan.

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 26 September 2016

Yes, you need to pay service tax under reverse charge on abated value i.e. 30%. Furthermore youcan take credit of amount paid on the date of payment and can adjus against your normal output liability.

Regards

Dipak Ghosh (GM Finanace and Accounts) (30 Points)
Replied 27 September 2016

Thanks for your reply, I have one more query on the above that we have to pay service tax on Rs.10 Lacs @ 4.5% that is Rs.45000/- and after payment we can adjust this against next months service tax on Invoice to the customer. Suppose next month Invoice to the customer Rs 12 lacs+ Service tax Rs.54000/- so we have to pay after adjistment (Rs54000-Rs.45000) = Rs.9000/- to pay to the Govt.

Please correct me if my understanding is incorrect. Would you please let me know is there any notification that we can adjust this GTA as CENVAT Credit.

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 29 September 2016

No, Credit of SBC is not avaialble therefore the same need to pay in cash only. Further, as such there is no notification to say specific that credit can be taken . However, Notification no 30/2012 put condition on the service provider and not on the service recivier to not to avail credit. Therefore, credit can be taken provided other conditions are complied with.

Regards