Liability of Service Tax

Hi Amit,

ST in case of Transportation is falling under GTA Service which is to be paid by one who pays frieght i.e. in your case you are supposed to pay ST (you said you pay freight to transporter). I would like to tell you that while deducting ST you are not supposed to see whether transporter has deducted ST or not on freight amount. Furthermore, you can always avail credit of the same. Furthermore, there are too many exemptions given to GTA Service on certain conditions given in notifications.

Kindly take appropriate advice from consultants.

Warm Regards.

DEAR AMIT

YOUR STATUS IS "SUPPLIER / TRADER" YOU BILL THE PARTY INCLUSIVE OF TRANSPORTATION FOR YOUR PRODUCT. YOU ARE NOT A SERVICE RECEIVER. SO YOU DONT HAVE TO PAY SERVICE TAX ON TRANSPORTATION

IF TRANSPORT COMPANY DO NOT CHARGE SERVICE TAX TO YOU IS THEIR HEAD ACHE NOT YOURS

Hi Eklabya and Amit,

There is some misconception on Eklabya's part. Take a look at Reverse Charge Mechanism in Service Tax introduced via Rule 2(1)(d) (V) of Service Tax Rules, 1994 where it clearly shifts ST lilability to one who pays freight. 

This sub-clause was introduced beacuse government wanted to remove ST liability which was earlier levied on Transport Agencies. Remember there was a big strike of Truck drivers on this issue and it has affected trade like anything.

So government simply shifted the burden of ST liability to one who will pay freight i.e. either consignee or consigner but he would be certainly not Transport Agency. After this amendment they have also introduced a whole procedure for such collection and payment of ST which requires a thorough understanding of business and a help from ST Consultant which I earlier also suggested.

Pls feel free to ask further.

Warm Regards.