Goods Transport Agency

“With effect from 1.3.2008, taxable service in the nature of transport of goods by road services excluded from the definition of output service”

This express exclusion was introduced in order to specifically provide that Cenvat credit cannot be used to discharge service tax under the category ‘GTA’. In other words it should be paid other than thru Cenvat Credit account. (For example in Cash)

Because if GTA is considered as output service and if a manufacturer is allowed to pay the service tax on GTA through his accumulated Cenvat Credit and the same is once again availed as Cenvat Credit by him, then there is no revenue to the Government. Then it would be only a book exercise.

Please give me brief descripttion about above topic of Goods Transport Agency with proper example

In the case of services provided for the transport of goods by road in a goods carriage, service tax is required

to be paid by certain categories of persons who pay the freight instead of the service provider namely Goods

Transport Agency. The actual amount of service tax payable is 25% of the amount of freight i.e. 75% of the

amount of freight is provided as abatement, subject to the condition that no Cenvat credit of the duty paid has

been availed of under Cenvat Credit Scheme. It has been represented that fulfillment of the condition of nonavailment of Cenvat credit by the service provider is, at times, difficult to prove, when the service tax is required

to be paid not by the service provider but by the consignor or consignee who pays the freight. Taking into

account the special nature of the goods transport agency (GTA) service, it is being exempted from the payment

of service tax unconditionally to the extent of 75% of the freight. In other words, service tax is required to be

paid only on 25% of the freight irrespective of who pays the service tax. Simultaneously, the benefit of Cenvat

credit has been withdrawn to GTA service under Cenvat Credit scheme by deleting the said service from the

scope of output service in the CENVAT Credit Rules, 2004. Henceforth, the person who is required to pay

service tax under reverse charge method on GTA service can pay service tax on 25% of the freight

unconditionally. Recipient of GTA service paying service tax under reverse charge method is no more required to

prove non availment of CENVAT credit by the GTA service provider.

Menu

lalit

U S Sharma

Leave a Reply

Recent Threads

Related Threads