Gta -service tax applicability

Others 1706 views 2 replies

satya

Executive Excise

1839 Points Joined January 2008

Answer to the following link;

/experts/-gta--1838459.asp

"Respected Sir,
I would like to post a query regarding Service Tax :
I am a business man engaged in transportation of heavy vehicle like Truck, Tipper & JCB Machine. I use to provide the vehicle in hire basis to the factories and they made me payment through cheque after deduction of TDS with proper way. My turn over in F.Y. 2012-13 was of Rs. 45 Lacks and in F.Y.2013-2014 my turn over is Rs. 95 Lakhs, and as per Service Tax Act and Rules I was liable to take registration in F.Y.2012-2013 but due to unawareness it was overlooked by me but recently I come to know that I should get registered under the same and I took registration before superintendent on 05-04-2014 thereafter got the registration certificate ST-1and the business in the certificate was shown was â€œRent a Cabâ€ instead of â€œGTAâ€, and from the day of registration I used to charge service tax in my bill @ 12.36% on gross value of the bill and same was deposited to the Service Tax Department, without claiming abatement of 75%, but recently the Service Tax Department served me a notice to produce 5 years Balance Sheet, Profit & Loss A/c. and form 26AS, after that I met the Superintendent of Service Tax with the abovementioned documents, after examination of entire paper the Superintendent told me that the registration is wrong, I should amend the registration and include the â€œGTAâ€, in my certificate. As well as he pointed out that I was liable to take registration in F.Y. 2012-2013 which I have failed to do for which a penalty of Rs. 10,000/- will be imposed and then I have to pay service tax on previous bill because in the eye of Service Tax Department non-collection of service tax is deemed that in bill the service tax was included, but fact is that I have not collected any service tax in my bill.

1. Now, can the department will allow me to amend the certificate for inclusion of â€œGTAâ€, and service tax payment made in â€œ Rent a Cabâ€ head instead of â€œGTAâ€ head.
2. Will the Department has power or rule to collect the entire tax which I have not collected in previous bill.
3. Will the Department will allow me to utilize the facility of abatement of 75% in previous bill i.e. F.Y. 2012-13 to F.Y.2013-2014 or 100% of service tax will be charged thereon. e.g. Gross Bill 100/- and service tax 12.36
/- or on 25% of bill value will be charged.
4. As such I have made a huge payment on 100% on gross value @ 12.36 % in this year without claiming any abatement. i.e after registration in head of â€œRent a Cabâ€ is there any provision to adjust the excess payment with my service tax demanded.
5. After Registration I have collected Service Tax e.g. Gross Value of Bill is Rs. 100/- and Service Tax 12.36/-"

Dear Anonymous,

pl note that your activity does not comes under either "Rent a Cab" or "GTA" , it is coming under the head of "supply of Tangiable Goods" or "Cargo Handling Service, both are attracts @ 12.36/-

as per your illustation you are saying that abatement, first of all , if it is under "GTA" means ST liability does not falls on Service provider (You), always it is on Receipient (in your case Factory) burden only.

Replies (2)

CA Chandrashekar L

Practicing Chartered Accountant

245 Points Joined July 2009

Dear Sathya,

1. First the nature of service provided by you is to be known:

a)GTA Service: As per section 65B(26) GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called.

b)Rent a Cab Service: As per clause (f) of section 66E of the Act, transfer of goods by way of hiring, leasing, licensing or in any manner without transfer of right to use such goods is specified as declared service, hence the activity of renting or hiring of motor vehicles to carry passengers is chargeable to service tax subject to the condition that right of possession and effective control is not transferred along with the vehicle.( Also refer the term “Motor Vehicle” as per Motor Vehicles Act 1988 and also there are some of the case laws w.r.t. the term “Motor Vehicles”)

c)Supply of Tangible Goods Service: “Taxable Service” means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances as per Section 65 (105) (zzzzj) of Finance Act,1994.

Further it is to be noted that the board as issued the clarification through Circular DOF No. 334/01/2008-TRU dated 29.02.2008 that the excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes, etc., offshore construction vessels & barges, geo-technical vessels, tug and barge flotillas, rigs and high value machineries are supplied for use, with no legal right of possession and effective control. Transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as service.

Hence from the above, in my opinion the service provided by you falls under the “Supply of Tangible Goods service”.

2.As per section 68, liability to pay service tax is upon the service provider irrespective of whether service tax is collected or not. However when service tax is not collected upon the service rendered, the amount recovered from the client will be taken to be the inclusive of service tax.

Thanks & Regards,

CA Chandrashekar L

Neeraj Kumar Giri

ACCOUNTANT

190 Points Joined November 2013

Respected Chandshekhar Sir,

As per your clarification if I fall under Supply of tangible goods Service, then what is the scope to get out of these problems because in the previous year my turnover was 95 Lakhs it means I have to pay 95,00000*12.36%=11,74,200.00 its means Rs. 11,74,200/- as a Service tax which I have not ever collected. What is the abatement limit of "Supply of Tangible Goods Services", will the Department calculate the tax after the deduction of abatement or on Gross Bill i.e. on Rs. 95 Lakhs.

My fault is that I have not registered under Service Tax after crossing of threshold limit for that a penalty should be imposed by the department, it is reasonable but non-collection of tax will be considered as collection or tax, I think it is quite unreasonable for any assessee.

Please specify me, Under which section or rule it has been mentioned that the Department will assume or consider that service tax has been collected on previous bill.

Please Sir give me some hopeful way to come out of this problem because it is hard to give such amount of tax which I have not collected. If you have some judgement or order of Apex Court in this regard please provide me.

Thank You.