Observation on goods transport by road services

Income tax is a direct tax where both, incidence & impact of tax, is on the payer of tax, while service tax is an indirect tax where tax burden keeps on shifting. This is the reason why strict clubbing provisions are not generally required in case of service tax. There is no real benefit in case of indirect taxes as tax has to be charged from some other person & paid to government. Service provider only acts as a collecting agent.

Direct tax is an out of pocket cost. Practice of shifting income is prevalent in direct taxes as where income is shared, benefit of basic exemption limit is available and lesser tax is to be paid, which gives direct benefit to taxpayer in form of higher disposable income.

There is no provision for clubbing receipts of services provided by spouse. Where goods carrier is transferred to spouse and the transferee spouse provides service through a separate commercial concern, transferee spouse is liable to pay service tax. Goods transport agency has been defined as follows:

"(50b) “goods transport agency” means any commercial concern which provides service in relation to transport of goods by road and issues consignment note, by whatever name called."

Hi Siddharth

Rightly pointed out by my friend Prabhat. Besides, I would like to add something: -

Under the Service Tax Law,tax is on the service provided (may be through a property- in your case a goods carrying vehicle) and not on the individual (which is the case under Income Tax Law). Please do not mix up Income Tax & Service Tax concepts. Word used is "any person". Owner(assessee) in this case shall be the person receiving the charges for the service provided and hence, assessable to service tax, even if minor/wife or any other transfree. If taxable value is below the threshold limit, owner can enjoy exemption.